Seattle's Strengths Turning into Weaknesses?

Up until a few months ago, the Seattle area's labor market was stronger than in most of the rest of the nation, and stronger than just about anywhere else in the Pacific Northwest. But recently, a new shoe seemingly drops every week, signaling a serious deterioration in Puget Sound region's labor market in the first half of 2009, and quite likely beyond that.

Strengths Turning to a Weaknesses? Some examples:

• Washington Mutual, the largest employer and tenant in downtown Seattle is laying off the vast majority of its workforce (and vacating most of its office space) after its spectacular collapse in late 2008.
• Aerospace, an area of strength until mid-year 2008, is suddenly looking pretty weak in the knees. Last week Boeing announced the upcoming lay-off of thousands (up to 5,000, reportedly). Continued delays in the new 787, weakness in the airline industry and worldwide economy have all had impacts. In the past few months, several other aerospace suppliers in the area have announced and/or already implemented layoffs.
• Technology: until recently one of the last bastions of private-sector strength (other than healthcare), now looks to be a drag on the local economy and labor markets in 2009. In late 2008 Microsoft signaled a slowdown in hiring, and Google announced it was slowing down its regional growth plans as well. And just this week, the rumors of impending mass layoffs at Microsoft are working their way through the local and national media. When Microsoft and Google (two of the deepest-pocketed companies in the industry) are pulling back, you know you've got a serious slowdown happening. If the Microsoft rumors prove to be true, it will have a major impact on the area high-tech sector, as Microsoft is the largest tech employer in the area, by far.
  
• Government & Education: The only two areas of employment growing in the latest state labor market reports, now seem destined to fall. With a possible $6 billion dollar state budget deficit, the City of Seattle closing schools, and the state pulling back on education funding in general, two of the the last areas of strength will start heading south soon.
• Healthcare: maybe the last bastion of relative strength in this labor market. Word has it that many consumers are electing to forgo doctor visits and elective procedures. Still, nurses are in short supply, and healthcare will remain stronger than nearly all other industry sectors.
  

Employment is a lagging economic indicator, so even after the economy hits bottom and starts to climb its way back up, the labor market recovery will likely lag for at least a year or more beyond that. (Remember 2002 and early 2003? The last recession ended "officially" in late 2001, but the labor market didn't really start recovering until the second half of 2003).

I wish we had more upbeat news, but this looks to be the worst labor market in decades - including in the Puget Sound Region.