Decreased consumer spending leads to national, regional unemployment


Unemployment rates by county show that Whatcom County is faring better than other counties.


As the economy continues to dominate headlines, the American marketplace has slammed on the breaks leading to a rise in unemployment across the nation.

In Northwest Washington alone, Arrowac Fisheries closed and cut 30 jobs; Alcoa reduced production and cut 100 local jobs; the Brunswick Corporation closed the U.S. Marine/Meridian boat manufacturing facility in Arlington, Wash., cutting 800 jobs; and the Rosario Resort & Spa on Orcas Island closed, putting 100 seasonal and 90 permanent employees out of work.

Ironically, in a recession, the media’s efforts to inform end up having a negative effect on an already ugly situation. As the economy suffers and the media tells everyone about it, consumer confidence and spending fall and retailers are forced to cut jobs or close.

Joe Giannamore, regional labor economist with the Employment Security Department, said right when the economy needs consumers the most, they clam up.

“When the economy declines, people tend to spend less and save more and by doing that they actually create more problems because they spend less and sales go down and then you see retailers closing up,” Giannamore said.

According to the U.S. Department of Labor’s Bureau of Labor Statistics, U.S. unemployment jumped to 6.5 percent as it lost another 240,000 jobs in October, and 1.2 million jobs have been lost in the first 10 months of 2008. Washington state’s unemployment picture is pretty flush with the national situation at 6.3 percent and Whatcom County is marginally better, hovering just above 5 percent.

Giannamore said regional construction and manufacturing have been hit hard in this recession.

“Construction has done poorly in the last six to eight months because the housing market is doing poorly,” Giannamore said. “Manufacturing is doing worse, because anytime you have a sluggish economy manufacturing goes down.”

Giannamore also said leisure and hospitality businesses are adding to unemployment numbers.

“Leisure and hospitality have dropped significantly because budgets are tight and people are traveling less,” Giannamore said.

Giannamore said that in the past the Washington state economy has been slightly stronger than the national economy, but cites the recent fall of Washington Mutual to show how Washington is not immune to national economic woes.

“We are not really insulated,” Giannamore said. “We are going to continue to see a rise in unemployment locally just like we will see nationally.”

Gary Smith, regional manager of WorkSource Northwest, said he has watched several sectors of the local economy soften, including retail, finance, insurance, real estate, title and escrow companies, general and wood-product manufacturing and some aspects of marine trades.

Smith is often the first responder when a company lays off a significant portion of its employees and has been responding to a few cases, including U.S. Marine/Meridian’s plant closure in Arlington.

“Businesses are seeing a downturn in orders and losing contracts that were dependent on business,” Smith said, “and many other businesses are laying people off and cutting back hours.”

Due to the rising unemployment, Smith said, regional WorkSource offices are seeing the highest traffic they have seen in five years. Ironically, WorkSource’s federal funding has diminished to its lowest levels in seven years.

“We are providing service to more people, which puts a strain on our limited resources,” Smith said.

To make matters worse, seasonal shopping, which normally provides a boost to employment numbers, is expected to be of no help.

Giannamore said there will always be seasonal increase due to the holiday season, but that effect will be dampened this year.

“This is going to be a very difficult season for most firms,” Giannamore said. “I don’t expect it to rise like it has in previous years.”

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