Describes the development of a distributed-lag econometric model of employment levels in each of Seattle's major industrial sectors. The model is then used to explore the reaction of the local economy to the 1969-1971 aerospace employment cutbacks, an event that has no simple explanation due to the confounding phenomena of long-term growth just prior to and a national downturn concurrent with those cutbacks. The model's principal value, however, is as a forecasting tool, and in this regard the report presents an empirical study that shows it capable of dealing effectively with the problem of predicting the magnitude and timing of the effects of changes in general economic conditions. 75 pp. Bibliog.