Once again, the Economic and Revenue Forecast Council has positive news for state budget writers. Revenue collections continue to come in above expectations.
Major General Fund-State (GF-S) revenue collections for the January 11, 2020 – February 10, 2021 collection period came in $269.5 million (15.3%) higher than forecasted in November, primarily due to Revenue Act tax collections. Cumulatively, collections are now $592.6 million (9.0%) higher than forecasted.
As the updated chart shows, collections are back on trend.
While the economic recovery may be K-shaped, tax collections show a clear “V” as they bounce back from the bottom of the COVID recession.
As always, the ERFC update provides a lot of useful information on the economy.
We have two months of new Washington employment data since the November forecast was released. Seasonally adjusted nonfarm employment declined in December following a smaller than expected increase in November. Over the-two month period, employment declined 1,600 which was 48,200 less than the increase of 46,600 expected in the forecast. Private services-providing sectors lost 5,900 jobs in November and December, weighed down by the loss of 18,700 jobs in leisure and hospitality. The manufacturing sector managed an increase of 900 jobs in spite of the loss of 1,300 aerospace jobs. Construction employment increased by 2,700 jobs and state and local government employment increased by 3,900 jobs. Federal government employment declined by 3,100 jobs of which 1,600 were temporary census jobs.
This caught our eye.
Washington exports declined over the year for a ninth consecutive quarter despite a large increase in agricultural exports. Year-over-year exports decreased 18.1% in the fourth quarter of 2020. Fourth quarter exports of agricultural products increased 69.6% over the year but this is misleading as it was largely due to soybeans which receive only minimal processing in Washington. Transportation equipment exports (mostly Boeing planes) fell 63.7% over the year. Year-over-year exports from all other sectors (mostly manufacturing) declined 8.3%.
Washington car and truck sales surged in January to their highest level in more than two years.
Here’s the ERFC summary:
U.S. employment increased by 49,000 jobs in January; the unemployment rate declined to 6.3%.
U.S. initial claims for unemployment insurance decreased this week but the four week moving average has remained above 800,000 for nine weeks.
U.S. real GDP increased by 4.0% in the fourth quarter of 2020.
U.S. residential construction activity continued to grow in December.
Washington housing construction improved in the fourth quarter of 2020 and slightly exceeded the forecast.
Washington exports declined over the year for a ninth consecutive quarter.
Major General Fund-State (GF-S) revenue collections for the January 11, 2020 – February 10, 2021 collection period came in $269.5 million (15.3%) higher than forecasted in November, primarily due to Revenue Act tax collections.
Cumulatively, collections are now $592.6 million (9.0%) higher than forecasted.