I think that's a bit of a reach. That malaise may have contributed to certain aspects of the conglomeration of groups/sounds that came to be called grunge, but let's not forget the vigorous marketing efforts around it at the time. Economically-speaking, the decline of the timber industry in the Pacific Northwest may have as had as much or more to do with music-impacting unhappiness.
You're right; the shift away from old-growth timber logging, along with fisheries decline/regulation, all had significant impact as well. We were talking about major employers causing city-wide economic trouble, though. Not sure Weyerhaeuser was as significant an employer in Seattle.
Weyerhauser's HQ was a large property along I-5 between Auburn and Fife. Not really a Seattle phenomenon, especially the logging which happened in the peripheral counties. So i'll place a vote for the Boeing effect gestating the grunge era. It was poor, and it was grungy.
Interestingly, Weyerhauser has sold the old HQ and relocated to a downtown Seattle high rise.