Latest monthly state economic and revenue report shows collections slightly ahead of projections, good job growth

The Economic and Revenue Forecast Council has released its latest monthly report. It continues to reflect the state’s generally healthy economy, while sending some cautious signals.

We have just one month of new Washington employment data since the March forecast was released. Total nonfarm payroll employment rose 14,300 (seasonally adjusted) in March after a revised 5,300 decline in February. The March forecast expected an increase of 6,200 jobs in March. The strong job growth in March was probably influenced by unusu- ally severe weather in February. The construction sector added 4,500 jobs in March after losing 4,200 jobs in February. Private services-providing sectors added 8,000 jobs in March. The manufacturing sector added 200 jobs and government employment increased by 1,500 jobs.

Washington’s unemployment rate edged up to 4.6% in March from 4.5% in February. The rate remains near the all-time low 4.4% first reached last June. The reason for the slight uptick since June is that while employment has continued to grow, the labor force has grown even faster.

After a strong fourth quarter, housing construction weakened in early 2019.

The rear-view mirror confirms that the state has been through good times.

Washington personal income rose to $458.0 billion (SAAR) in 2018 from $428.8 billion in 2017. The 6.8% growth rate in Washington personal income was the largest among the states and District of Columbia and was much higher than the 4.5% growth rate for the U.S. as a
whole (see figure). The difference between Washington and U.S. personal income and GDP growth 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).

Revenues continue to come in at a healthy rate.

Major General Fund-State (GF-S) revenue collections for the March 11 – April 10, 2019 collection period came in $13.9 million (1.0%) above the March forecast. Revenue Act tax receipts were $62,000 (0.0%) lower than forecasted while all other receipts came in $14.0 million (7.1%) higher than forecasted.

So far so good. Yet, it’s worth remembering that the latest monthly report from the Wall Street Journal’s survey of economists finds half of them projecting a recession next year. 

Time to be cautious about future commitments.