I have hesitated to update this blog with an economic page due to the downturn in our national picture as well as local doldrums. In a meeting last fall with Mel Dick, former CFO of Coldwater Creek, and David Keyes, editor of the Bonner County Daily Bee, the question was asked of how many restaurants would go under before the next summer season. We were just firming up the plans for Dine Around Sandpoint. This one-month long promotion had radio and print advertising, and strategic internet marketing. It was intended to give a boost to some of our local eateries during what is normally one of the slowest periods of the year. By all standards it was a success.

I have worked for years supporting the arts, local events, and mentoring small businesses, but this year seemed especially important. So far, it looks as though Sandpoint is faring well. Few businesses have closed their doors this winter. Plus, while recently unemployment in Bonner County was at a 25-year high, we have some bright spots. For instance, after losing Harold's Grocery four years ago to the new Panhandle State Bank building, we have had only one major downtown supermarket. Super 1 Foods store opened last summer, providing needed downtown competition. Laughing Dog Brewing has exponentially expanded into its new, much bigger facilities. With the kind of expansion reported, this small beer company is now selling in 26 states. Another bright spot is Smart Plugs, and a new company that will be building straw bale, affordable smart homes across the country. Other companies are cutting back, some are closing down. Quest Aircraft just laid off 65 employees in August and another 26 in November putting their employed at roughly a third of the labor force it employed at peak. However, Quest is still in business. Quest will sell 15 of the $1 million Kodiaks in 2010 with 13 of them out the door and two under production. The company has orders for 18 in 2011 which equals one plane a month. Dish Home Cooking, which has won critical acclaim, closed its doors in October. Lumber is not fairing much better.

The Inland Northwest has suffered from downturns before in the lumber industry. About the time that the spotted owl and national moods were against sustainable lumber, Bonner County, where lumber mills have closed recently, had unemployment rates from 11.1 to 15.1 percent. In Oregon, where the county government revenues are so tied in to the lumber industry, basic services like ambulances and county sheriffs are either being eliminated, or cut to the bone. In Sandpoint and Bonner County, it has been a long time since the heydays of Humbird and the other great mills. While Priest River is still largely dependent on lumber, Sandpoint has diversified with industries like Quest Aircraft, Airtow, Encoder, Litehouse Foods, and Coldwater Creek, and many more. Yet, just the summers of 2007 and 2008, ads ran for months offering jobs at the mills at roughly $100 a day, including full benefits. The building boom was a reprieve for the industry, but there doesn't appear to be any comeback on the horizon. It is hard to compete with Canada right to the north. Their prices for 2x4s are lower than ours, and with free trade, it is hard for local mills to compete. Once, doing a talk radio show in Sandpoint, I hosted an hour-long reading of the History of North Idaho. Right after the show I got a call from a Miss Eppie who chastised me at length for not mentioning the Laclede lumber mill. She is in her 80s. Pretty soon, maybe only octagenarians will remember when lumber was king in North Idaho. We may be able to keep some of them open, but without the rest of the nation needing our tree products, we will probably see more closing soon.

Winter of 2008 was considerably better with several smaller big block and mom-and-pop stores opening. While that was a marked sign of economic health, many of those decisions to build were made in the better years of 2006 and 2007. Indeed the decision for Super 1 to build has been in the works for years.

It is a good time to get the best deals for fledgling businesses. In the old BBQ joint on Highway 200 behind the Bonner Mall the new Paul Bunyan burger stand just opened, offering a multitude of hamburgers, all priced at $2. My company, Tomlinson Sandpoint Sotheby's International Realty, just bought the Sotheby's in Coeur d'Alene, with the new company becoming Tomlinson Sotheby's International Realty. The rents in Sandpoint, which have been inflated for years, now is very reasonable. Yesterday I looked at space in the Cedar Street Bridge going for 50 cents a square foot, with a generous period of months provided gratis.

Double digit unemployment rates can be frightening; however, these rates are not all that unusual in Bonner County. In the last twenty years unemployment rates have been in double digits at least thirty different months. Winters are always hard, and summer hiring has not started yet. In the past, when more of our workforce came from timber, we had a natural ebb and flow based on the weather. Current numbers reflect a non-seasonal downturn. We don't expect to see big numbers hired this summer in that all businesses are wary and are being careful. See the historical unemployment rates here.

There have been other improvements in our economy. A new Holiday Inn Express opened not far from Schweitzer Mountain Ski Resort, and two other hotels have been renovated and updated to national chain standards. The NOAA had predicted a warmer, drier winter season in the Pacific Northwest, and with that forecast, Schweitzer reevaluated its ski season goals. However, after having two record-breaking seasons both in snow and revenues, few expected 2009-10 to be a banner year, especially with the minimal snowfall. Yet sales records were topped last season once again. 2010-11 has the NOAA predicting a wetter and cooler winter due to La Niña, yet Schweitzer has tentatively announced it will open mid-December, which is later than their usual Thanksgiving opening date. Schweitzer, which had been very generous with the new management of Tom Chasse, dropped its sponsorship of Lakedance Film Festival, and cut back a bit on its charities and events. These were good business decisions. After all, if Schweitzer is not financially successful, the company cannot disperse largesse. Luckily, we had sufficient snow on the mountain to have a decent ski season.

Lakedance ended up leaving the area after the 2009 season. The reasons given were tenuous at best, and though having the recognition of a recognized film festival that had recieved press from the highest sources was nice, the festival never quite brought in the numbers that were hoped for. Granted, it takes time to establish a following for these kinds of events. The Festival at Sandpoint is a case in point. Yet in recent years other long-standing events almost disappeared, such as the Sandpoint Winter Carnival. This is a natural occurance. Those participants that put on the shows get burned out; funding dries up; people just stop coming. We used to have a timber festival. With lumber playing less and less of a role, only places like Priest River, which still is closely tied in to its industry, still have a Timber Fest.

The very big snow years of 2008 and 2007 were not so good for our economy either. Certainly it caused many to leave, and perhaps put off those who were considering relocating to our area. We are seeing more people move out of rural regions of Idaho and into urban areas. Much of this can be attributed to jobs, but simple access is important. Big snow makes it hard to get around. The continued recession added to the downturn of the kinds of people and and businesses that moved here in previous years. Read this article in the Bonner Daily Bee: Idahoans leaving state's rural areas.

Most familiar with Sandpoint know we are a manufacturing town. As mentioned previously, one of our star companies, Quest Aircraft, is down to 120 from 345 employees, and Coldwater Creek had cut staff months previously, they have been on a virtual hiring freeze for almost a year. Coldwater Creek, though, as our biggest company with sales over one billion dollars is not strapped. They continue to pay for their operations with cash, not having to dip into the credit line they procured a couple of years ago. Other companies had made similar moves. (Here is Coldwater Creek's financials.) Lumber mills closed due to the slow down in construction, and orders for our manufactured goods had slowed, though recent company figures are encouraging. On the other hand, Litehouse Foods has met and exceeded all of its sales goals, and continues to be a bright spot in our local economy.

With sales numbers increasing, companies are going to have to start hiring within the next 12-18 months. Things are getting better, albeit slowly.

There is lots of evidence supporting this premise, especially for Idaho:

For instance, as of today, November 9th, 2010, Bonner County's unemployment rate is at 11% down from a 25-year high of 13.7%.

Spokane's rate is at 8.2%, lower than the Washington State rate of 8.6% and considerably lower than the national number of 9%. We are very influenced by Spokane and Coeur d'Alene. Kootenai County to our south has a rate of 9.3%, and Boundary to our north is at 12.6%. So, the farther away from Spokane, the higher it goes. However, they are in full recovery, we are not far behind.

Here are some of the pundits:

Five States That Will Lead US Out of Recession - CNBC

Energy states, Idaho leading comeback from recession - USATODAY.com

Silverwood, more than 600000 - Coeur d'Alene Press: Business

Even the most trusted economist on Idaho's economy, Jeff Thredgold, is optimistic about our immediate and long-term future. You can read what he wrote for the winter season below.

According to the January 2010 Idaho Economic Forecast, a publication produced by the Division of Financial Management, Idaho's economy, which includes housing starts, will grow only modestly. Personal income, with had grown dramatically since 2002, actually shrank in 2009 and is predicted to recover to 2008 levels this year.

Housing starts are a fraction of their highest mark of 23,418 in 2005. By 2009, that number had fallen to 5,890, but are predicted to improve to 7,756 starts for 2010 and will grow to over 16,000 by 2013.

Taxes are not going up in Idaho, but the budget has been cut, and state funded schools are also having to make due with less. Idaho has low taxes. Recently, several articles have raised the question of how competitive Idaho's universities will be with tuition increases and budget cuts. Another idea being bandied about is to combine the research dollars and efforts from competing universities. Hard times demand creative solutions.

Yes, compared to most states, and especially Washington and California, Idaho taxes are low. But if you move here for the low taxes, be prepared for what comes with it.

Companies like Buck Knives moved to Post Falls for quality of life, not for tax incentives; Idaho has few of those. At the time of writing this piece Buck Knives had just produced their millionth knife of 2010. Pretty cool. One thing that keeps companies away from our area is the lack of trained and qualified workers. Labor costs, proximity to markets, low crime, access to highways, quality health care, red tape and schools all come before corporate taxes. We have many of the things companies are looking for, such as low crime, and we are at the center of several major rail lines. Certainly driving to work with majestic mountain and gigantic lake views are inspiring, and many companies have made that move. In a good economy, our advantages have tipped the scale and attracted great companies to our area. One wonders in a recession are these advantages enough?

As far as educated and qualified, there were plans to build a University of Idaho satellite here. Dennis Pence, founder of Coldwater Creek, had pledged 10 million, and the state had offered matching funds. Then the economy blew a tire, and Coldwater's stock fell dramatically. Dennis' gift was based on the value of the stock and the offer was put on hold. We still will probably get the facility, but it may not happen for ten or twenty more years.

People in Idaho are willing to work hard and for less money than many other places, but they are not as well trained or educated. In Idaho, twenty-five percent of working adults have a college degree, ranking our state in the lower tier.

We spend less on education in Idaho. In 2007 Idaho's per pupil expenditure ranked 49th out of 50 states and the District of Columbia.

The unemployed are also another drain. The January 2010 Idaho Economic Forecast predicts modest gains for the next three years.

The Brookings Institution recently reported that Western states' economies aren't snapping back as fast as the rest of the nation. The institute points out that Western states relied too heavily on real estate sales as an industry. In this article on ActiveRain (Sandpoint & National Housing Data - March 24, 2010) we addressed the housing issues of North Idaho and Sandpoint, and pointed out sales in our region fell 17% from last year, and values went down an equal amount.

Sandpoint is absolutely tied in with the greater Coeur d'Alene and Spokane economy, no matter how much we like to think we are independent. One national reporter stated last year that the two worst places to invest in real estate were CdA and Hawaii.

However, CdA and Kootenai County just to the south of Sandpoint has lower unemployment than Sandpoint's rate and Spokane is even lower. In fact, The Spokane-area economy appears to be strengthening again, according to the most recent Spokane Leading Economic index compiled by Washington State University professor Don Epley.

Meanwhile, in a second index compiled by Epley the purchasing power of Spokane's work force continues to decline, though the rate of decline has slowed.

The Spokane Economic Activity Index compiled by Washington State University professor Don Epley developed two years ago to track Spokane's economy using methods tailored to the metropolitan area's economic makeup, climbed markedly to 0.37 in his recently released report, from 0.38 in his spring report. The index can vary between zero and 1.0.

Another area that is doing better in Spokane is housing. While both unemployment and housing may be fully in recovery, the numbers aren't great enough to cheer about. The numbers are encouraging though.

According to CBS Money Watch house values for this year will decline just another 1.1% in Spokane, then start going up to 3.9% next year. Coeur d'Alene fares a bit worse, declining 7.6% this year, and losing another 0.3% by the third quarter of 2011. While clear numbers are not available for Sandpoint, our figures normally mirror these other indicators. Lakefront and luxury will mirror Spokane, the rest will be more in tune with CdA.

So, as Spokane recovers, next will follow Coeur d'Alene, then Sandpoint. As previously mentioned, the NOAA forecast a warmer and drier winter and that played out, but this also means we will have a hotter, drier summer. With one of the largest natural bodies of water in the west - Lake Pend Oreille - one area of our economy that may begin recovering faster than others is tourism. When people visit the lake, they think of buying homes.

Our economic outlook is a mixed bag, and some might even call it dismal. But right now, homes are more affordable than they have been in years, and this is still considered by several national magazines to be one of the best small towns in America. The numbers also make it more affordable for companies to be in our area.

Sandpoint, Idaho is a great place to live.

Sandpoint, Idaho again will be featured in a national magazine in an upcoming article in Country Living. Last Friday they asked me for pictures of our area. Pretty cool. I was very proud of being prominently interviewed in the December issue of Where to Retire magazine in their five page article on Sandpoint. The Sandpoint, Idaho real estate market is stronger than other areas, and it makes sense. Idaho was named the nation's 8th healthiest and 14th happiest state. Schweitzer Mountain Ski Resort was named to Ski Magazine's Top 25 Ski Resorts, and there is so much to do in Sandpoint. Summer had the Festival at Sandpoint, Dover Days, and scores of events, and fall and winter has Winter Carnival, Schweitzer Mountain Ski Resort, and Sandpoint's own Mardi Gras. Sandpoint has been called the West's best small town by Sunset Magazine, and one of America's Best Dream Towns by Outside Magazine, naming Sandpoint the "cool Northwest's hot property." National Geographic called Sandpoint a Top 10 Adventure Town, plus features in USA Today, Forbes, MSNBC, and Smart Money Magazine. Perhaps Cabin Life, Cabin Living said it best calling our community "the quintessential Western outdoor lover's town." So, now that Sandpoint, North Idaho, Schweitzer Ski Resort, and Lake Pend Oreille have got your attention, you want the inside story. More information about Sandpoint, Idaho

Tourism

Tourism grew rapidly in the late 1980s and early 1990s. Summer tourism grew, as North Idaho became better known as a tourist destination, and as more Canadians shopped and played in Bonner County. Sandpoint's reputation as a haven for the arts also contributed to the growth of tourism. The 1990 expansion of Schweitzer Mountain Resort boosted winter tourism. The biggest boost to area tourism were the articles published in national newspapers and magazines over the last several years. Our area has been featured in USA Today and Smart Money Magazine. Sunset magazine called us the “West’s best small town.” National Geographic Adventure magazine voted Sandpoint one of the 10 best adventure towns in the nation. Outside magazine featured Schweitzer & named Sandpoint the “cool Northwest’s hot property.” Schweitzer was in Away.com and has been in many ski mags such as Ski Snowboard. Forbes.com loved our telecommuting, MSNBC said it again, & Cabin Life, Cabin Living called Sandpoint “the quintessential Western outdoor lover’s town.” These are just a few of the dozens of features on the area since 1990.

Tourism employment normally reaches its high point of the year in August, falls to its lowest level before Thanksgiving, rises to its winter peak between Christmas and New Year's, and then falls to its lowest point in April. For example, tourism employment went from 1,720 in January 2001 to 1,430 in April, then rose to 1,802 in August, then fell back to 1,430 in November. These figures have increased by over thirty percent since then.

With Bonner County Population growth impressively outpacing the national average, the prospect of growth is all but assured. In a recent article in Smart Money, according to the magazine, buying property in Sandpoint, Idaho is one of the ten best ways to create wealth in the nation. While many areas area seeing their housing values decline, in a recent article in CNN/Money, Coeur d'Alene was forecast to appreciate 12.8% for 2006, and Sandpoint has traditionally appreciated much higher than our neighbor to the south. Additionally, manufacturing and tourism are creating a population that has the expendable income consumer that is the typical restaurant diner, shopper, and dynamic that feeds an economy like ours.

As is indicated by current economic data, the national, as well as the local economies have been in recovery for two-three years. However, one of the great areas of growth is in the direction of at home services and trends. While travel has slowed, local travel (i.e., under 50 miles from home, in-state, and cross-state) has grown. Sales of time shares have slowed, but home improvement has exploded. This is clearly evidenced by the growth of Lowes and Home Depot, as well as the over forty (40) new television programs geared entirely to home building and remodeling and a proliferation of cooking and home oriented shows from Martha Stewart to the Food Network. Dining out continues to be a growth area, and Americans are eating out more and more, with substantial growth created from the take-out and planned meal arenas.

With more and more specialized events such as Art Shows, the Wooden Boat Show, Arts and Crafts fairs, the Festival at Sandpoint, and many more, the glowing outlook for Tourism is growing every day.

Energy states, Idaho leading comeback from recession - Published in USA Today September 21, 2010

Idaho's Unemployment Rate Improves - Published in USA Today September 21, 2010

Northern Idaho Area Labor Market Information

Northern Idaho is comprised of the five northern most counties of Idaho: Benewah, Bonner, Boundary, Kootenai, and Shoshone. The beauty and lifestyle of this area has attracted thousands of new residents in recent years, making it Idaho’s second most populous region. The region’s largest city, Coeur d’Alene, is just 33 miles from Spokane, Washington, where many Northern Idaho residents work. Industries playing major economic roles include the lumber industry, a wide variety of other manufacturing industries, tourism, retail, agriculture, call centers and the Coeur d’Alene and Kootenai Tribes.

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