Economic Outlook Survey

Economic uncertainty – across the globe and in our neighborhoods – has become commonplace early in 2019. Although our state has enjoyed nation-leading job and income growth, the murmurs of concern have mounted in many corners. As often as we hear announcements of new jobs, new stores, manufacturing plants, and restaurants, we hear that consumers and employers are losing confidence. Retail sales were down last December. 

Economists are revising their 2019 forecasts, saying growth is slowing. Nearly half of the nation’s  business economists anticipate a recession by the end of next year.

Expectations drive budgets, for families, businesses, and governments. The mechanics are simple. How much money do we think we’ll have? What are our spending commitments? Our priorities? What can we do without? How much should we hold back for emergencies? 

Over the last ten years, state spending has grown 44 percent. And revenue growth in our state has been among the strongest in the nation. Yet, many lawmakers are now calling for new taxes and higher spending.

Against this backdrop, we want to know your thoughts on the state economy. Do you expect continued growth? Are we headed for a slowdown?

 

Washington Research Council compares House and Senate budgets

The Washington Research Council offers a quick, easily-understood graph comparing the House and Senate spending plans (reproduced below). 

The WRC goes into more detail on the revenue provisions of each budget in this podcast.  

Before the session began, Opportunity Washington stated some budget considerations that are particularly relevant as lawmakers begin final fiscal negotiations:

Even with the ongoing economic recovery, the state budget will face stress for the foreseeable future as a result of court-mandated increases in basic education funding, increased health care expenses, negotiated public employee compensation increases, and increases in other required state spending.

Given these pressures, special emphasis must be placed on controlling key budget drivers, including health care, labor costs, and debt. 

Even with some $3 billion in revenue being generated by a growing economy, writing the 2015-17 biennial budget poses special challenges. We urge lawmakers to focus on budget solutions that encourage economic vitality and are sustainable over time.

Slight bump in revenue collections, recovery here still on track

The Economic and Revenue Forecast Council’s March 11 update contained some good news for the state. 

In the last three months the Washington economy added 31,600 jobs, a very strong 4.1% rate of growth (SAAR). In contrast, employment grew at an average rate of 2.9% during the previous 12 months. The construction sector added 7,700 employees in November, December, and January. We believe that unusually mild weather accounted for some of the strong growth in construction employment. Manufacturing employment rose 3,600 in spite of the loss of 400 aerospace jobs. Private services-providing employment grew 18,800 in the three-month period and the public sector added 1,400 jobs.

Revenue collections were up a bit. 

Major General Fund-State revenue collections for the February 11 – March 10, 2015 collection period were $16.7 million (1.6%) higher than the February forecast. Revenue Act collections came in $21.6 million (2.3%) less than forecasted while non-Revenue Act collections came in $38.3 million (38.9%) higher than forecasted. Most of the surplus in nonRevenue Act collections came from real estate excise taxes. The forecast included a $13.3 million audit payment that did not occur during the collection period but is still expected to occur. Had the payment occurred as expected, collections would have been $30.0 million (2.8%) higher than forecasted.

The Washington Research Council takes special note of migration into the state and concludes,

This is a clear sign that the economy is returning to normal.

Normal is good.