How Puget Sound residents are coping with economic uncertainty

Matthew and Stephanie Sharp consider themselves fortunate in what many economists were predicting might be the rockiest U.S. economy in more than a quarter-century. They're employed — Matt with a company that measures Internet audiences and Stephanie with a nonprofit — and they keep their savings in plain-vanilla accounts. Even so, they've put off plans to buy a condo.

"We don't want to stretch ourselves and deplete our savings right now," said Matthew Sharp, 24.

With gasoline prices hitting records, the couple sold Matt's 2004 Jeep Grand Cherokee (Stephanie, 23, drives a Honda Civic) and he rides the bus from home in Kirkland to work in Seattle. Between saving at the pump and on a car payment and insurance, they bank about $600 extra a month. They want to use it to pay off their last credit-card balance by August. They have no children.

"The name of our game right now is 'simplify,' " Matt says, pegging their combined income at $88,000 a year. "If I were to explain how we're reacting to the current economic situation, that's the word I'd use. Get rid of the things we don't need and prioritize our wants, saving for them over time instead of charging and paying back."

Seattle has, so far, fared better than most cities in the downturn. Major employers such as Microsoft and Boeing are still hiring, unemployment is low and the region has been much less exposed to the housing collapse than places such as Phoenix, Las Vegas, inland Southern California and Florida.

Major figures such as Alan Greenspan and Warren Buffett have said the United States is already in a recession. Lately, some economists have predicted that the downturn might not be so bad. Moody's Economy.com puts at least nine states in a recession.

Either way, the slowdown has severely damaged one marquee company, Washington Mutual, and has helped bring the acquisition of another, Safeco. It's also playing out in the small decisions and life-changing upheavals among individuals.

This is the first installment of occasional columns that will examine the downturn's consequences at the grass-roots level.

"A little scary"

Sue Wilson was among the 3,000 laid off by Washington Mutual in December. She's had no success finding a job since.

"It's a little scary," she admits. "I had recently gone part time, so I felt more vulnerable. It's worse for a lot of my friends there. ... These are people who felt they were very secure and making good money. Now they're faced with being laid off. There's not a lot out there to go after."

The state lost 1,800 nonfarm payroll jobs in April, and nearly 159,000 residents are seeking work. Even so, job creation in Washington remains stronger than nationally.

Wilson, 58, had cut back her hours because of the long commute from her home in Blaine to downtown Seattle, where she worked as a manager for information-technology projects for the thrift.

Before going part time, she had made $124,000 annually and had worked at WaMu for seven years. Now she'd prefer to find similar work in banking closer to home but is finding few options.

One impediment is her lack of a college degree. She started as a new-accounts clerk for the old National Bank of Washington, and a degree wasn't required. She worked her way up in the industry.

Now, she says, "it's a whole new ballgame. I don't have a degree but I have lots of experience. But it's hard to get past the first interview."

Her husband is a retired air traffic controller. They're living off their savings and his pension.

"In the past, we've been extremely fortunate," she says. "I had good-paying jobs for 40 years. Now we have to worry."

"On the edge"

Gene Brandon, a semiretired substitute teacher in Port Hadlock, Jefferson County, calls the national economy one of the worst he's seen in his 70 years. He has spent the past three months getting half his food from the Chimacum food bank. "I go at noon to help with boxes that are too heavy for the ladies and fellows with canes and bad knees," he says.

"When the line gets down to a dwindling number, say three, I join in with my cloth bag and make some choices from the produce, bread and cans of soup. One bag of groceries supplements my grocery needs to the tune of $20. ... On a low income of Social Security, the $80 a month is quite valuable." His annual income is $14,400.

High food and gasoline costs were the most common concern among people I talked with.

According to federal statistics, for example, the price of eggs has risen 35 percent since March 2007, while a gallon of milk has jumped 23 percent. Unleaded gasoline averaged $3.86 a gallon in Washington last week, versus $3.44 a year ago. And all this comes after years of relatively low prices for food and gas.

He says he is "extremely worried about the economy," especially the way it hits the poor. He taught in Hungary in 2000 and asks, "How can a poor country like Hungary provide health insurance for every citizen and the U.S. with all its wealth deny 40 million people health insurance?"

Briefly homeless himself in the mid-1990s, Brandon worries that now "millions are on the edge."

"It's very tight"

Jan O'Hara, a warehouse manager for King County, has taken to using the bus to commute from her Bellevue home to work in Seattle. It's the first time she's done so in 15 years and blames gasoline prices. She's also had to rethink the car trips and visits to a vacation house on the coast. The 57-year-old stated her income between $40,000 and $60,000.

"It's very tight and getting tighter," O'Hara says.

She was widowed in 1993 and laid off from Boeing later that year. She has no children. However, she cares for her mother, who lives with her.

Higher food prices have caused her to switch to powdered milk and those once-a-week dining-out treats have become once a month, and at lower-priced restaurants. The inflation is especially evident eating into her mother's fixed income, both from food prices and the cost of medications.

"Those of us who thought we were ahead of the game and thought we had saved enough for retirement ... we'll have to move in with our children. And a lot of people haven't saved at all."

Is the worst over?

Maybe this is as bad as it gets. Recently, the Dow Jones Industrial Average briefly regained the 13,000 level and national job losses have been less than economists had feared. It caused some observers to speculate that the worst of the credit crisis is over and the recession will be mild.

That would bear out the "incurable optimism" of Patsy Carmichael. Even so, in a recent interview she says with a rueful laugh, "I'm a Realtor without clients. ... There's a bunch of buyers waiting. I say, 'What are you waiting for? It's a buyer's market.' "

Carmichael is 75 and has been selling houses here for 20 years. With a good year in 2007 and three closings earlier this year, Carmichael considers herself fortunate.

"A lot of agents are hurting," she says, adding that she's grateful for her frugality. "I'm very Scots-Irish. I don't spend money frivolously."

And she remains bullish long-term on the local housing economy.

Still, some caution is in order, at least nationally. When real-estate bubbles burst, the damage can be long-lasting. Japan in the 1980s and 1990s is the classic example. In the United States, a huge unsold inventory of houses remains a drag on the economy.

And while Wall Street may have no more Bear Stearns-sized surprises, it will take time to work out all the bad bets from the bubble. The loss of Safeco, which lost the confidence of investors, in part, because of (misplaced) fears about its investment portfolio, shows how even a national crisis of confidence in the markets can infect the local economy.

If the recession is short-lived, it's good news for the Seattle area, which was most vulnerable to a long, deep downturn.

Those good tidings depend on no more surprises, especially from Seattle's big employers, and recovering credit markets that can fund the next generation of those companies. Meanwhile, many individuals will keep picking up the pieces.

"I had never been laid off," Wilson says. "It was more emotional than I expected it to be. It's been very hard. It makes you second-guess everything."

Jon Talton is a journalist and author living in Seattle. For more than 20 years he has covered business and finance, specializing in urban economies, energy, real estate and economics and public policy. You can reach Jon Talton at jtalton@seattletimes.com