Latest economic and revenue update show collections coming in slightly below forecast; other economic signals are mixed.

The latest monthly update from the Economic and Revenue Forecast Council report tax revenues are coming in very slightly below the March forecast. Call it essentially a no-news update or, possibly, evidence that the forecast was on the mark.

Major General Fund-State (GF-S) revenue collections for the April 11 – May 10, 2019 collection period came in $13.5 million (0.7%) below the March forecast. During the period there were $10.9 million in large one-time payments for past-due taxes that were not in- cluded in the forecast. Without these payments, collections would have been $24.4 million (1.3%) lower than forecasted.

Cumulatively, collections are now $0.4 million (0.0%) above the March forecast. Without the large one-time payments, cumulative collections would have been $10.5 million (0.3%) lower than forecasted.

There are plenty of flags, some of them red, on the economic horizon, with global uncertainty and the trade dispute with China still prominent. The ERFC update says,

National data were generally positive this month but with some exceptions. Labor market data indicated continued strong job growth, a low unemployment rate and a decline in layoff announcements. New home sales were up this month but existing home sales dropped and residential construction activity remained weak. Manufacturing and non-manufacturing activity continued to expand but at a slower pace.

The U.S. economy added 263,000 net new jobs in April. Employment data for February and March were revised up by 16,000 jobs.

Underscoring the complicated national environment…

Two key measures of consumer confidence again moved in opposite directions this month. The University of Michigan consumer sentiment survey decreased by 1.2 points to 97.2 in April. Although survey respondents were slightly more pessimistic about both current and near-term conditions compared to March, 60% reported that they expected to be better off financially over the next five years. The Conference Board index of consumer confidence increased by 5.0 points in April to 129.2. Consumers responding to the Conference Board survey indicated they were more optimistic about both current and short-term future eco- nomic prospects but the index remain below levels seen in fall 2018.

And here in Washington,

We have two months of new Washington employment data since the March forecast was released. Total nonfarm payroll employment rose 19,800 (seasonally adjusted) in March and April which was 6,000 more than expected in the March forecast. The construction sector added 5,000 jobs but manufacturing lost 400 jobs. Private services-providing sec- tors added 12,700 jobs in the two-month period and government employment increased by 2,500 jobs.

Washington’s unemployment rate edged up to 4.7% in April from 4.6% in March and 4.5% in February. The rate was at its all-time low of 4.4% as recently as October 2018. The reason for the increase in the last six months is that although employment has continued to grow, the labor force has grown faster.


Washington exports declined over the year for a second consecutive quarter. Washington exports declined 3.8% in the first quarter of 2019 compared to the first quarter of 2019. Exports of transportation equipment (mostly Boeing planes) fell 8.0% over the year. Agri- cultural exports increased 3.1% while exports of all other commodities (mostly manufac- turing) decreased 0.5%.

Washington real Gross Domestic Product (GDP) rose 5.7% in 2018 which was the highest among the states and District of Columbia and was much greater than the 2.9% growth rate for the U.S. as a whole. The difference between Washington and U.S. real GDP growth in 2018 was mostly due to two sectors: retail trade (which includes electronic shopping) and information (which includes software publishing and other IT services such as internet publishing and web search portals).

These reports offer clear, timely and objective assessments of the state and national economy. We recommend them.

Two other notes: