A Washington State University professor here has developed what he believes are accurate new methods for measuring the Spokane areas economic growth.


Don Epley, an urban economist and a professor of real estate and finance at WSUs Spokane campus, says he developed two economic indices for Spokane because he believes the market lacks measurement tools that take into account the true buying power of its residents and the specific makeup of the local economy.


One of those indices, called the Spokane Economic Activity Index, is modeled after the Consumer Price Index, but rather than tracking the price of goods, Epleys index tracks job data, weighted on the values that differing wage and salaries paid provide to the economy. For instance, a minimum-wage job has much less impact on the local economy than a $40,000-a-year job, even though both jobs count the same in basic job-number employment statistics.


Essentially, that index tracks the value a worker adds to the economy through his or her purchasing power, Epley says.


The other new index is called the Spokane Leading Economic Index, and is a compilation of moving averages of recent months building-permit figures, projections from the earlier-mentioned activity index, and current leading U.S. economic indicators.


We put together indices that have ease of understandability and that are consistent with urban-growth theories, says Epley, who completed work on the methods about six months ago and has been testing their accuracy since. Epley has been with WSU since 1997, and transferred to its Spokane campus this past summer.


He says he now is looking for a partner or funding source so he can expand his efforts to track the Spokane-area economy, and to distribute information about his indices to organizations and businesses that could use them for decision making. At this stage, he says hes open to any possibility for such a partnership.


It looked pretty good to me overall, Avista Corp. economist Randy Barcus says of Epleys indices. It shows us what has been going on. He adds, however, that all methodologies have flaws, such as being able to predict the impact of planes flying into buildings.


Adds longtime Spokane economic watcher Phil Kuharski, Im pretty impressed with it, probably more than anybody else hes shown it to.


Other sources contacted about Epleys indices say they support his efforts, but dont want to comment publicly on their value until the march of time proves them to be accurateor not.


One possible weakness of the indices is that apparently no other community is using similar measures yet, which makes it difficult to use them to compare Spokanes economic growth, or lack thereof, with that of other communities. Epley says it would take additional funding for him to assess the economic progress of other communities using the indices, unless other communities eventually adopted his methodologies on their merits. Even with that data, Barcus adds, comparing the economic growth of communities gets pretty tricky.


Meanwhile, Epley says the activity index can help Spokane economic-development officials measure changes in growth from year to year, perhaps to evaluate the impact of policy or programs over time. The index also might be useful to real estate professionals who must make a case to outside retail chains that want to understand the purchasing power of the work force here, he says.


If Epleys numbers are right, longtime Spokanites wont be surprised by them. Since 1989, the first year for which he compiled data in his Spokane Economic Activity Index (SEAI), the index has increased an average of 2.44 percent annually, with no major jumps or declines. In other words, the index reflects no boom or bust in Spokane.


The regional economy does not appear to be influenced significantly by economic forces outside the region, although specific employers are much more vulnerable to national events than others, Epley writes in a recent growth report based on his index.


Kuharski says the smooth growth trend that Epleys index shows over the past 12 years indicates that despite what might be perceived from news accounts about layoffs and the recruitment of new employers, there is more continuity in income than we think. The economy might lose 20 good-paying jobs and pick up 25 or 30 moderate-pay jobs. If all that stuff is weighted, it helps explain why there is more smoothness, he says.


I feel thats a very powerful item, looking at our economy, Kuharski says.


He adds that since 1989, the earliest year Epley uses in his tracking, We havent had a real tough recession like we had in 84, when we had a real tough time. He says the dip felt nationally early last decade was nothing really here, since it largely affected manufacturing, which doesnt have a real base here.


Epleys numbers do show seasonal fluctuations.


In each year, the index typically reaches its lowest level in the first quarter, is consistently higher in the second and third quarters, and is usually highest in the fourth quarter. That movement most likely reflects a concentration of employers that require seasonal workers, he says.


When the SEAI goes up, that indicates that the local work force will have additional income to buy goods and services, while a decline suggests workers here will have less to spend, Epley says.


Epleys other new index, the Spokane Leading Economic Index, is constructed in a different manner, and attempts to predict the direction in which the local economy is headedand how dramatically.


Specifically, the index tracks six economic indicators: single-family residential building permits here, non-residential building permits, a projection of the SEAI, the U.S. Index of Leading Economic Indicators, the U.S. Index of Consumer Sentiment, and the U.S. Non-manufacturing Index of Business Activity. Epley says the latter national index was chosen because it reflects Spokanes service-sector dominant economy.


While the three national indicators each showed negative trends in his most recent analysisthat for the third quarter of this yearthe three Spokane indicators were positive. The resulting index for the third quarter was up 0.57 points (read like a stock market index), which means the indicators in the index have a cumulative impact on the local economy that is positive and points to further expansion, a recent report from Epley says.


He says that despite gloomy news of layoffs in the Spokane market, there are bright spots, such as building permit numbers, that indicate Spokanes economy continues to grow at a modest clip.