SLAMMED BY the dot-com bust and backto- back Boeing downturns, the Puget Sound economy (King, Pierce, Snohomish and Kitsap counties) hit bottom in the second quarter of 2003. The recession lasted two-and-one-half years and cost the region 82,000 wage and salary jobs, raising the unemployment rate from 4 percent in 2000 to 7 percent in 2003.

And it could have been much worse - perhaps as many as 110,000 lost jobs - had it not been for Microsoft's ongoing growth. Between 2000 and 2003, Microsoft added 5,400 workers to its local payroll, boosted average employee wages by 40 percent, and distributed another $11 billion in stock-option income. Taking into account the multiplier effect, the software giant generated an estimated 30,000 new jobs over the three-year period, substantially mitigating the losses in the rest of the economy.

One thing to be said about the trough of a recession, the prospects are good. After getting things turned around in 2003, the Puget Sound economy quickly recovered. By the third quarter of 2005, the four-county area had recouped all of the jobs lost during the downturn. In 2006, the economy was still going strong, adding jobs at better than a 3 percent annual rate, twice the national pace.

Now that the national economy is slowing down, is the region's good ride in jeopardy? Many analysts are particularly concerned about the U.S. housing market, which has taken a turn for the worse because of weakening economic growth and increasingly unaffordable homes. Over the past year, U.S. existing home sales have declined 14 percent, while the median home price has fallen 2 percent, according to September figures from the National Association of Realtors. This has already taken a toll on singlefamily homebuilders. The greater fear, however, is that the housing slump will adversely affect consumers, whose recent spending spree has been bolstered by big gains in home equity.

Clearly, this is a time to be watchful. But the chance of a regional recession anytime soon seems remote. Here are seven reasons why:

·         National outlook. Over the past year, as the U.S. housing market has deteriorated, the Blue Chip panel of 50 economists has lowered its prediction of real Gross Domestic Product growth in 2007 from 3.1 percent to 2.5 percent. But not a single panel member foresees a national recession this year. Indeed, the most pessimistic forecast calls for a 1.9 percent gain.

·         World economy. U.S. real exports will continue to expand at a 9 percent rate because of a strong world economy and a weak dollar. As the nation's top trading region, we stand to benefit from this export boom, much as we did in the 1980s. A back-of-the-envelope calculation suggests that, relative to the nation, this surge in foreign sales is boosting the regional economic growth rate by 0.5 percentage points, all else being equal.

·         Boeing. Because of favorable international market conditions, the long-term success of the 737, and the popularity of the new 787 Dreamliner, Boeing will soon recapture its title as the world's No. 1 producer of commercial jet aircraft. More important from the regional economy's standpoint, Boeing and its aerospace suppliers will add between 5,000 and 8,000 jobs over the next two years, as annual production ramps up to 500 airplanes or more.

·         Microsoft. The software company's strategy for strengthening and diversifying its product line is simple: Spend billions of dollars on research and development and hire lots of smart people. We anticipate that local employment will increase by about 2,000 per year in 2007 and 2008.