Barely perceptible dip in state revenue collections in December 10 monthly report; National confidence data signals concern

The Employment and Revenue Forecast Council collections report for November 11 to December 10 shows tax collections came in 0.8 percent below forecast. As the Washington Research Council writes,

This is the first collections report since the November 18 meeting at which the ERFC revised downward its forecast of revenue over the remainder of the 2015-17 biennium by $55 million. 

The ERFC report reports on the national economy,

This was another month of mixed economic data. Job growth was good but slower than October’s very strong reading. Real GDP growth was revised up. Auto sales remained strong, but overall manufacturing activity contracted. Data from the housing sector were mixed, with weaker housing starts and home sales but stronger building permits.

The ERFC says that state employment growth has slowed some. And, they provide more information on how prosperity is concentrated in the state

In November, the BEA released annual local personal income estimates through 2014. According to these estimates, per capita personal income ranges from a high of $68,900 in King County to $30,700 in Ferry County. The higher income counties are mostly in the metropolitan areas around Puget Sound.

A couple of reports from the National Association of Manufacturers suggest more uncertainty ahead. Consumer confidence, though improving, remains shaky.

The University of Michigan and Thomson Reuters said that consumer confidence rose slightly in December in preliminary results. The Consumer Sentiment Index increased for the third consecutive month, up from 91.3 in November to 91.8 in December. Despite the higher figure, these data continue to reflect an American public that remains anxious about the economy.

Something similar is happening with the manufacturers’ outlook.

The latest NAM Manufacturers’ Outlook Survey found that 59.6 percent of manufacturers were either somewhat or very positive about their own company’s outlook. This was the fourth consecutive easing in sentiment, down from 91.2 percent one year ago, and it was the lowest figure since the fourth quarter of 2012, when manufacturers were worried about the fiscal cliff. Moreover, it remained below the historical average of roughly 73.5 percent.

The ERFC picks up on some of the cautionary signals.

The Institute of Supply Management – Western Washington Index (ISM-WW) moved to neutral in November after three months of contraction. The index, which measures conditions in the manufacturing sector, rose to 50.0 in November from 46.1 in October (index values above 50 indicate positive growth while values below 50 indicate contraction). The August and September readings were also below 50. The production, orders, and employment, and inventories components all improved in November but the deliveries components worsened. Prior to August 2015, the index had been above 50 in every month since July 2009.

It’s too early to be worried, but the yellow lights are flashing. Caution ahead.