The light at the end of the tunnel to economic recovery remained dim this year for most industry sectors here, but greater optimism about 2011 is providing a new glow. Expect improvements, albeit from lower levels of activity than we're used to, as the Inland Northwest marches doggedly from the darkness of a poor economy, observers say.

Private-sector hiring should strengthen in 2011, though it's unclear by how much, given budget concerns within government, a big employer here. If the overall market begins to recover, a backlog in demand should spur hiring.

Hope abounds in the real estate sector, following five years of declining home sales and continued softness in other parts of that industry. Recovery is expected to be slow, and might not begin until the third quarter. "I see the market at the bottom," longtime real estate executive Dave Black says about commercial real estate.

Builders believe a turnaround in the housing market might already have begun, and that the nonresidential market is at or near its bottom. "The big question about 2011 is whether the private sector will be ready to step in as stimulus and public funds run out," says building group exec Kate McCaslin.

Meanwhile, high-tech manufacturers here generally expect robust—and in some cases double-digit—growth in 2011. Also bullish, mining executives are anticipating another stellar year, fueled by historically high metals prices and growing world demand.

Look, too, for improvement in the financial sector, but don't expect a complete turnaround until 2012, bankers say. "We have to get people back to work," says an otherwise optimistic Jack Heath, of Washington Trust Bank.

Across the border in Kootenai County, manufacturing and tourism are expected to lead North Idaho out of the economic downturn. Encouraging signs already are emerging there.

On the downside, the health-care sector here faces major challenges and uncertainties in the coming year. Patient volumes have been down, reimbursements remain tight, and more consolidations are expected. Also, tourism officials say Spokane isn't likely to match in 2011 what has been a banner convention and event year in 2010, though overall visitor spending could still grow.

Expect modest improvement in the retail sector, although that's from a depressed 2010. There are some bright spots, and slack development and leasing activity is forecast to mend in 2011.

The agricultural market is expected to be strong again in 2011, building on this year's higher prices and good yields, while the wood products industry, buoyed by improvements in recent months, expects small gains next year.

—Paul Read