Geoscience Reference
In-Depth Information
Table 8.7
Puget Sound employment ex ante prediction error analysis
12/05
Prediction
(% change)
Conditional
prediction
(% change)
Conditional
prediction
error (%)
Actual
(% change)
Prediction
error (%)
2006
3.2
2.7
0.5 (
0.5)
3.9
0.7 (0.7)
2007
2.9
2.4
0.5 (
1.0)
2.4
0.5 (0.2)
0.4
1.3 (
1.1)
2008
0.9
2.3
1.4 (0.4)
2009
4.0
1.8
5.8 (6.2)
3.5
0.5 (
0.6)
Note
: The numbers in parentheses show the accumulated prediction errors to date
Source
: The Puget Sound Economic Forecaster (Conway
2009
)
6 years, reaching 3,823,900 in 2013. Based on the December 2013 forecast, the
current population estimate in 2013 is 3,837,000, a difference of only 0.3 %.
Why did population growth stay the course during the Great Recession? As
noted in Sect.
8.5
, the Puget Sound population growth rate depends primarily on the
difference between the regional and national employment growth rates, a difference
that did not change as a consequence of the downturn. Six years ago it was forecast
that between 2007 and 2013 the Puget Sound average annual employment growth
rate would exceed the U.S. rate by 0.3 percentage points (1.5 % versus 1.2 %). The
latest data indicate that due to the recession the actual job growth rates were much
slower (0.1 % and
0.2 %, respectively) but that the difference was still 0.3
percentage points.
Although the Puget Sound Forecasting Model is premised on the economic base
theory of regional growth, it has a much more complex logical structure than the
three-equation output model discussed earlier. The fact that the Puget Sound
Forecasting Model performed well in the ex ante prediction experiment attests
not only to the efficacy of the model but also to its underlying theory of regional
growth. In particular, the conditional predictions shows how the Puget Sound
economy is intricately tied to the U.S. economy, a finding that is hardly surprising
given that the nation is the region's largest export market. Reasonably accurate
predictions of nonbasic employment support the concept of the multiplier process.
Finally, the ex ante test sheds further light on the mobility of labor, revealing that
population growth follows a very predictable path even in a severely contracting
economic environment.
Conclusion
Washington is a good case study of the process of regional economic growth. It
has an abundance of economic data, most notably the 44-year series of input-
output tables, as well as a long history of regional economic modeling. The state
economy has also exhibited strong but volatile growth over the past 50 years. In
particular, Washington's ups and downs enable analysts to observe how the
economy responds to changes in its environment (e.g., the Great Recession).
The case study presents a classical picture of an open regional economy
operating in a much larger arena: a trade-dependent economy with little, if
