Not too long ago, the Boeing Co. controlled the economic destiny of Washington State.

During the recession of 1969 to 1971, massive cutbacks at Boeing pushed the local unemployment rate to 11%. Billboards asked that the last person to leave Seattle put out the lights.

So when the aerospace giant announced in January that it would cut another 19,000 jobs in the Puget Sound region over the next two years, some Washingtonians feared the worst.

Boeing has already axed thousands of positions since 1989. By 1994, it will have eliminated roughly one-fourth of the 107,000 jobs it was providing in the Seattle area at the end of 1989. And economists estimate that one additional job disappears in the region for every one lost at Boeing.

However, many bankers and economists are convinced the latest Boeing cutbacks can be shrugged off.

"What I'm looking for in western Washington in 1993 is a flat year, not a repeat of 1969," said John Mitchell, chief economist of U.S. Bancorp, Portland, Ore.

High-Tech Transformation

Indeed, the current round of Boeing layoffs is milder than those of two decades ago, and the Seattle-area economy is far more diversified. The growth of high technology businesses - symbolized by the meteoric rise of software powerhouse Microsoft Corp. - has transformed the Northwest metropolis.

The economy in Seattle has slowed but hasn't fallen into recession. For Washington State as a whole, wage and salary employment rose 1.3% from March 1992 to March 1993. In the Seattle area during the same period, job growth was a sluggish 0.8%.

Seattle-area bankers say they expect banking conditions to remain soft without deteriorating dramatically.

Making the Best of It

"We are seeing good, but not excellent loan demand," reports Sarah M. R. Jewell, president and chief executive of West One Bank, a unit of Idaho-based West One Bancorp. "We expect the overall market to be flat to slightly up for the year."

But she warned that with relatively weak loan demand and a wave of banking mergers, the lending market has become downright predatory.

"Without exception, banks are aggressively protecting their own relationships and going after relationships of others," Ms. Jewell said. "It's as competitive as I've ever seen it."

One uncertain point for her and other Seattle bankers is credit quality. Until now, they have been spared in large part from the bad debt problems of other regions.

"Credit quality is actually quite fine," says Scott McAdams, an analyst with Ragen MacKenzie, a Seattle brokerage firm.

But some bankers worry about the ability of Boeing suppliers to meet credit obligations.

Community bankers, on the other hand, seem upbeat.

"Our loan demand is increasing at a faster rate than last year," says Patrick M. Fahey, chairman and chief executive of Pacific Northwest Bank, a Seattle-based business bank.

Slack demand from Boeing suppliers is being offset by growth in other sectors, he said.

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