Today’s Friday Roundup takes a look at several views of the continued strength of the national and state economies. You doubtless have other sources and perspectives on the question. Please don’t leave this post without sharing your views by answering three brief questions.
This roundup was prompted by news that the state unemployment rate had reached an 11-year low and tax collections were coming in 2.2% above the June forecast.
At the same time, some analysts are predicting an economic slowdown. Mixed signals and alternative scenarios are nothing new in economics, as Harry Truman famously groused. (“Give me a one-handed economist,” he said. “All my economists say, ‘on the one hand…on the other.’”)
And while forecasting is difficult, policies and plan are based on expectations of what’s likely to occur in the future. Here’s a bit of what we’ve been reading, including some of our recent blog posts.
From the blog:
Some (mostly) upbeat reports:
Washington state’s technology industry isn’t always considered in the same league as California’s. But a 2017 study getting renewed attention this week suggests that Washington is actually punching well above its weight.
Credit reporting site WalletHub compared all 50 states and the District of Columbia across 27 metrics for economic health and opportunity in the report…Washington ranked No. 1, driven by factors like strong gross domestic product growth, exports per capita, and percentage of high-tech jobs.
The Conference Board: The Conference Board Economic Forecast for the U.S. Economy
The second quarter of 2018 showed the US economy in full flight, illustrated by 4.1 percent GDP growth, which compensated for a modestly disappointing first quarter to bring first half growth to 3.1 percent. With tax cuts continuing to support growth and budget increases kicking in, federal spending along with high business and consumer confidence should drive growth to a 3.3 percent average during the second half of the year. This will likely represent a peak. Less support from monetary and fiscal policy, and a weaker global economy will gradually slow the economy to below 2.5 percent growth by the end of 2019.
The Federal Reserve raised its outlook on U.S. economic growth on Wednesday [June 13].
The median real GDP forecast rose to 2.8 percent, up from 2.7 percent, for this year. There were no changes for 2019 and 2020, and the longer run median forecast remained 1.8 percent.
Economic activity has been rising at a “solid” rate, the Fed’s statement said, marking an upgrade from “moderate” in the previous statement.
Deloitte Insights: United States Economic Forecast, Q2 2018
Our scenarios are designed to demonstrate the different paths down which the administration’s policies and congressional action might take the American economy. Foreign risks have not dissipated, and we’ve incorporated them into the scenarios. But for now, we view the greatest uncertainty in the US economy to be that generated within the nation’s borders.
The baseline (55 percent probability): Consumer spending continues to grow. A pickup in foreign growth helps to tamp down the dollar and increase demand for US exports, adding to demand. Fiscal stimulus from the tax cut bill and the budget agreement pushes growth up to close to 3.0 percent in 2018 and above 2.5 percent in 2019.
And some less upbeat assessments:
Few are arguing that the economy is about to enter a tailspin, but there’s some evidence to suggest the rate of growth may be approaching its limit, if it’s not already there.
The numbers are by no means bad. But particularly in housing, it looks like there are headwinds to further growth.
Seattle Times (Talton column): We’re seeing the biggest threats to the economic expansion in years
Market turmoil spreading from Turkey, a low-grade corporate bond bubble, slowing housing market, inexperienced Fed… Throw in a trade war, and we have the biggest threat to the expansion in years.
The worst may not happen. Gross domestic product is forecast to grow a healthy 3.1 percent this year, according to the Congressional Budget Office. But that outlook was recently cut from 3.3 percent in April. And even with this optimistic look, growth would tail off in 2019.
There’s clearly some uncertainty overlaying the extended state and national economic growth. Consumers feel good now, but are concerned about the future. Trade, labor supply, and residential construction worries – along with the coming midterm elections – complicate planning and policymaking.
So, what do you think our economic future looks like?