The Economic and Revenue Forecast Council has released its monthly update. It contains a line we haven’t seen for many months.
Major General Fund-State (GF-S) revenue collections for the March 10 – April 10, 2018 collection period came in $40.4 million (3.1%) below the February forecast.
The latest update follows the eye-popping forecast revision in February that added $1.3 billion through the next biennium and greatly eased legislative budget pressures.
As the ERFC points out, it’s hard to know what – if anything – to make of the underperformance last month. That’s because,
Collections for this period were affected by a mid-March change in the Department of Revenue’s tax reporting system. During the change there was a one-time extension of the due date for monthly returns, which moved some revenue out of March collections figures. In addition, collection patterns under the new system may also differ from that of the old system in ways not yet accounted for in the forecast.
The drop leaves cumulative collections since the February forecast down just $15 million from forecast, a drop of 0.6 percent.
The state economy continues to thrive.
We have two months of new Washington employment data since the February forecast was released. Total nonfarm payroll employment rose 11,800 (seasonally adjusted) in February and March, which was 900 less than the 12,800 expected in the February forecast. Private, service-providing sectors accounted for most of the job growth by adding 8,500 net new jobs. The manufacturing sector added 1,100 jobs and construction added 1,000 jobs. Gov-ernment employment increased by 1,300 in February and March.
Washington initial claims for unemployment insurance reached a new all-time low.
We look even better when compared with the rest of the country.
In March, after the forecast was complete, the U.S. Department of Com-merce, Bureau of Economic Analysis (BEA) released preliminary annual personal income estimates for 2017. The 4.8% growth rate in Washington personal income was the highest among the states and District of Columbia and was significantly higher than the 3.1% growth rate for the U.S. as a whole (see figure). The difference between Washington personal income growth and U.S. personal income growth was mostly due to two sectors: retail trade (which includes electronic shopping) and information (which includes software publishing and other IT information services such as internet publishing and web search portals). Retail trade earnings increased 15.3 percent in Washington compared with 2.9 percent for the nation and information earnings rose 8.9 percent in Washington compared with 2.4 percent for the nation.
While it’s always comforting to see numbers coming in above estimates, there’s nothing in this report to cause concern. As mentioned yesterday, though, a trade war could undo rosy projections.