Editor’s Note: Dont Let the Good Times Roll You

Our states economy is looking up. After five years in the doldrums, Washingtons total employment numbers are finally returning close to pre-recession levels. With new workers continuing to move into the state, the unemployment rate for June stood at 6.9 percent, far above the 4.6 percent rate before the recession, but dramatically better than the 10.2 percent rates as recently as March 2010. In Seattle, unemployment is below 5 percent. Manufacturing employment is back to where it was before the financial crash at the end of 2008.

The real estate marketcommercial, industrial and residentialis red hot, spurring new construction. There will be an estimated 31,000 new apartment units built over the next three years in the Seattle area, more than in the past nine years put together. A recent Kidder Mathews report lists three recently completed hotels and 10 more either under construction or in the planning stages.

Its beginning to feel like boom time again. And while we dont want to spoil the party, we need to remind ourselves that every boom is followed by a busteventually. Kidder Mathews predicts that new construction of apartments, for example, will hit a peak in 2015 and then plunge in 2016 as vacancy rates start to rise. Housing prices, which have been on a tear, are showing signs of easing as interest rates rise.

There are other storm clouds on the distant horizon. Exports have been a boon to the state in recent years, helping to offset slow growth at home. But China, which grew at double-digit rates during the recession, has slowed this year to a 7.5 percent rate. Not bad, but not the steam engine it once was.

Another big question mark is Microsoft. How did the company do in this make or break year? Its Windows 8 software was a bust and its Surface tablet did so poorly the company had to write off $900 million. Add that to the billions of dollars in losses from Bing and related online ventures and you start to wonder if the next CEO at Microsoft will cut costs or at least slow hiring. Given the companys huge role in our economy, any slowdown would be a big blow.

Finally, theres Boeing. The company hired straight through the recession, helping to support the regional economy. But during the past year, it has turned to cutting workers here as it expands production in South Carolina.

So, even as we bask in the glow of a revitalized economy, its worth keeping an eye on those clouds in the distance. They could be harmless. But it could be harmful to ignore them.