Are We OK Yet?
By Neil Irwin
Washington Post Staff Writer
Monday, December 29, 2003; Page E01
If you believe the Kennedy Center Indicator, the regional economy is growing like gangbusters -- but not if you take seriously the Cabernet Index or the Bruxism Barometer.
Season-ticket sales rose 11 percent over last year at the performing arts center. But at the District's Calvert Woodley Liquors, people are still buying more modestly priced bottles of Australian Shiraz and Spanish Rioja wine at up to $30 a bottle, not splurging on pricier cabernet sauvignon from the Napa Valley at $100 a throw.
After the recession and the terrorist attacks in 2001, D.C. dentist Jean Judy Carlson saw a fifth more patients with headaches and other ailments from teeth clenching and grinding, called bruxism. This year, even more people bought $400 mouthpieces to protect their teeth, suggesting happy days are not here again after all.
The traditional economic indicators are all very well, but most of the region's 5.7 million people measure the economy in different, smaller ways. Every day they get hired and fired, die or have babies, splurge on a new car, or tuck money away for a rainy day; the companies they work for thrive or fail; the mutual funds in their 401(k)s tank. For each of them, the economy is just down the street in higher coffee prices at Safeway or at the end of a daily bus ride to an office where people worry about making their sales quotas.
This kind of anecdotal evidence is sketchier than broad measures like the employment rate, but at the same time it is more compelling: People gain hope when a neighbor's house sells for a record price or grow anxious when a friend loses her job.
So, to figure out what's going on out there, here is a look at both kinds of indicators -- the scientific and the informal.
The good news is, both types overwhelmingly point to the local economy recovering, just like the national economy. But Washington isn't out of the woods yet.
"Businesses are doing a little better than just cautiously optimistic," said Togo D. West Jr., chairman of the Greater Washington Board of Trade and a lawyer with Covington & Burling, calibrating his own economic scale. "I'd say the outlook is just a tad short of rosy. And it's still well short of exuberant."
The region's unemployment rate is 3.1 percent, the lowest of any major city in the country and down from 3.5 percent a year ago, according to the Labor Department. The region has added 29,300 jobs in the past year, up 1 percent, while the nation lost 0.2 percent.
Economic output should end the year up a fairly robust 3.6 percent, according to the George Mason University Center for Regional Analysis. The nation's gross domestic product grew an estimated 3 percent this year. The region's economy is stronger because government spending through good times and bad keeps it on a more even keel than much of the rest of the country.
There is a second rung of numbers that are not so sweeping but provide useful hints about where the economy is heading.
For example, there is the rate at which companies lease new office space; after all, companies only need more room if they expect to have more employees. After two years of abandoning space, tenants in the region absorbed more than 6 million square feet so far this year. That was enough space for about 25,000 more employees.
Spending on office furniture and business equipment more than doubled in Northern Virginia in the three months ended in October compared with last year. According to state sales-tax receipts, $260 million worth of desks and file cabinets left stores, up from $115 million last year, a strong sign companies are expanding again.
In the hotel industry, a good indicator of how well Washington's extremely important tourism industry is doing, occupancy in the region rose to 62 percent in November, according to Smith Travel Research, from 58 percent a year earlier. Revenue per available room per night rose to $68.20 from $62.27.
The anecdotes, meanwhile, show how these big-picture numbers play out on the ground. Reporters for The Washington Post spoke to dozens of businesspeople for this article, from executives to shopkeepers to the shoeshine man in front of the restaurant McCormick & Schmick's, looking for the sort of indicators economists do not normally use to learn whether the recovery that began this year will turn into a boom in 2004 or be just an upward zig before another downward zag.
So: Are we okay yet? Their answer: It all depends.
Consider William E. Kennard, a managing director of international investors at the Carlyle Group and a former chairman of the Federal Communications Commission, who has noticed that it has been harder to book a business-class airline ticket lately, which he takes to be a sign more people are shelling out for premium tickets.
"Two years ago, there was no problem," he said
Or this: Attendance at R.L. Rasmus Auctioneers Inc.'s auctions of bankrupt companies' equipment jumped 25 percent in the past six months, suggesting more firms are out looking for old laptop computers and plush office chairs. On the other hand, when they go to this Alexandria firm, they are seeking fire-sale prices, which suggests caution, too.
Business is fine for the man who calls himself the "Godfather of Shine," Tony "White Pony" Lugthart, who polishes shoes at the K Street location of McCormick & Schmick's. "There's more people spending money," said Lugthart, who on a recent Thursday afternoon had four customers in line. The seafood restaurant's business has picked up, and that means "a little more business for me," he said as he buffed the glossy leather of a customer's shoes to a gleaming black.
Then there is Reston-based recruiting firm HireStrategy, which has put 177 workers in new jobs this year, up from 87 last year. Two years ago, said chief executive Paul Villella, a single opening might draw desperate applicants in the "hundreds and hundreds, even a thousand." Employers hired almost surreptitiously, fearing they would be inundated, too. These days there are lots fewer applicants.
But for many people, business is still tepid, often with little improvement in sight.
"The people who would come in and spend $200 on a bottle of wine are just not doing it anymore," said Ed Sands, co-owner of Calvert Woodley Liquors.
A year ago, it was impossible to get a haircut or coloring from Salon Cielo in the Tysons Galleria mall in Virginia without an appointment. This year Lucy Mendizabal, a manager and stylist, is taking walk-in customers. Business is steady but hardly spectacular. On the plus side, tips are larger.
Staff writers Michael Barbaro, Kirstin Downey, Sabrina Jones, Amy Joyce, Ellen McCarthy and Yuki Noguchi contributed to this report. |
