A Spotlight on the Pacific States: The Kiplinger Letter

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Nevada will post the strongest job growth in 2024 among the Pacific states, with a 3.0% increase. The Silver State’s 5.4% unemployment rate indicates that there is still room for hiring. Sectors such as hospitality have seen steady gains, surpassing pre-pandemic employment levels — good for the Las Vegas metro area, where hospitality accounts for one in four jobs and one in three dollars. The crash in lithium prices has caused a reduction in output at the Tonopah mine and put proposed mining projects at Thacker Pass, Rhyolite Ridge, and Clayton Canyon. A private high-speed rail line between Las Vegas and Los Angeles has received partial federal funding. Though it has yet to break ground, it is planned to be finished by the 2028 Los Angeles Olympics.

Hawaii will see a 1.6% increase in employment provided by the ongoing growth of tourism, though the sector is still hurting from an August wildfire on Maui. The fire caused visits to the island to drop by half and dinged tourism to other islands, too. Hotel occupancy is improving: In January, it was 75%, still below pre-pandemic levels but above the 72% of a year ago. Tourist spending has exceeded 2019 levels, but largely because of inflation: room rates and dining out in Honolulu are 30% more expensive than in 2019. The state has struggled to recover from COVID-19, with employment still 4.0% below that of 2019. But the unemployment rate is still low, at 2.9%. Construction will also see a burst of activity, thanks to federal spending. Pearl Harbor is in the midst of a $4 billion renovation. Housing will still be tight because of long permitting wait times for new homes. 5,000 on Maui are still in hotels waiting for permanent housing

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Washington’s employment growth which is now expected to clock in at 1.2%, could be crimped by manufacturing uncertainty. A large backlog of orders for Boeing aircraft is good for the sector, but the Federal Aviation Administration will limit production of the 737 MAX until various safety issues are addressed. Other portions of the aerospace sector are doing well. The Puget Sound area has emerged as the global leader in the production of satellites, with SpaceX producing six per day in Redmond and Amazon planning to make four per day in Kirkland. Jeff Bezos’ Blue Origin space company is expected to launch its first orbital rocket this year. It has so far sent 32 space tourists sub-orbital but has been picked by NASA to send two spacecraft to Mars later. 

Construction is also suffering from a split personality. Single-family homes will rebound after two down years, but multi-family construction will be flat, and non-residential construction will be even worse. Office vacancies in Seattle will be exacerbated by all the new space currently under construction. Seattle’s office vacancy rate is 22% (the U.S. is at 18%), yet the metro has the third-most office space under construction in the nation.

California will see employment growth of 1.1 % this year. The Golden State is still experiencing population loss, as more people flee its high cost of living. With the tech and financial sectors still feeling the effects of last year’s slowdown, the focus is now on improving profits and cutting costs. The artificial intelligence boom is creating demand for commercial space in Silicon Valley, though office vacancy rates in the Bay Area remain high, with San Francisco at 36%. Elon Musk’s Neuralink made its first brain implant in a patient, who was then able to move a cursor around a screen just by thinking. The company is recruiting quadriplegics and ALS sufferers as subjects, and expects to continue its study for six years.

Automakers have struggled with the slowdown in electric vehicle sales, though there are exceptions. Vietnam’s VinFast is planning its first U.S. factory, and Mullen Automotive has thrived by shifting its focus to commercial trucks. Nikola, which makes hydrogen trucks, has opened its first refueling station in southern California. The geothermal brine in the Salton Sea has been found to be a major source of lithium. Commercial-level extraction will be likely by 2027.  

Alaska will keep pace with California, with a 1.1% increase in jobs. The state has the highest rate of unfilled jobs in the region, with its tight labor market limiting growth. A recovery in tourism has resulted in a surge of hospitality and personal-service jobs, but expect other sectors, such as construction, to play a bigger role going forward. Nome, for example, will soon boast America’s northernmost deepwater port, to be used by both naval and cruise ships. The oil industry is also hiring again after Uncle Sam approved new drilling activity on the North Slope. Look for many Alaskan utilities to experience natural gas shortages, with imports tied up by federal permitting. State agencies demonstrated that controlled avalanches in snowy mountainous regions can be set off by the use of bomb-dropping drones. These achieve more precise results than the old method of using artillery.

Oregon will see the region’s slowest employment growth this year, at 0.8%. Most sectors will be flat, though housing construction will rebound, and health care and government will continue their uptrend. The rate of population out-migration has declined, but the strong in-migration of the previous decade is not likely to return, given high housing costs. That will cause the labor force to grow only gradually.

Chipmaker Intel, which employs 23,000 in Hillsboro, is likely to receive billions of dollars in subsidies from the CHIPS Act. Both industrial and residential users face higher electricity rates, in part to account for growing wildfire risks, which have also hit the state’s wine industry in recent years. Oregon State University scientists are developing a spray coating to protect grapes on the vine from smoke effects. The federal Bureau of Ocean Energy Management has finalized two areas for floating wind energy platforms 32 miles off the coast from Coos Bay and 18 miles off Brookings.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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