The state Economic and Revenue Forecast Council released its November Economic & Revenue Update yesterday. The Washington Research Council has highlights here. Revenues continue to grow more than anticipated in the September forecast. The WRC expects the November official revenue forecast will be revised upwards.
The update notes the mixed national news.
This was another month of mixed economic data. The labor market had its strongest showing since last year while real GDP growth slowed. Auto sales remained strong, although most other manufacturing-related data were weaker. Data from the housing sector were generally positive, with both housing starts and existing home sales up from their August levels.
And some takeaways on the state economy.
Total nonfarm payroll employment rose 4,000 (seasonally adjusted) in September, 2,400 less than the 6,400 expected in the September forecast. The shortfall in job growth was in private, service-providing sectors which added only 1,600 jobs in September. The September forecast had expected an increase of 5,200. The construction sector added 100 jobs in September and the manufacturing sector added 800 jobs thanks to an increase of 700 in aerospace. Government payrolls expanded by 1,600 jobs in September.
…For the third month in a row, the Institute of Supply Management – Western Washington Index (ISMWW) signaled contraction in the manufacturing sector. The index fell to 46.1 in October from 48.0 in both August and September (index values above 50 indicate positive growth while values below 50 indicate contractions). The production, orders, and employment components worsened but the inventory and deliveries components improved. Prior to August 2015, the index had been above 50 in every month since July 2009.
Overall, it’s a familiar story – some good news, some less good news, and some uncertainty. The same thing plays out nationally. This excellent FiveThirtyEight analysis examines some of the reasons voters remain skeptical of the good news. Ben Casselman’s piece looks at the issue through the lens of electoral politics and with a sharp focus on Iowa. The basic insights, however, are applicable in our state, as well.
The economy is, by virtually any measure, drastically improved from when President Obama took office nearly seven years ago. And yet poll after poll reveals a national electorate that is deeply skeptical of that progress. In one recent Wall Street Journal poll, more than half of voters said the economic and political system was “stacked against people like me.” That sense of alienation has fueled the insurgent candidacies of Trump and Bernie Sanders, and led even establishment candidates to emphasize inequality, middle-class stagnation and related issues.
The easiest explanation for this paradox is that it isn’t a paradox at all: Americans are pessimistic about the economy because, for many of them, the economy hasn’t gotten better. Unemployment is down, but incomes are flat. Millions of Americans left the labor force in the recession and haven’t returned. Millions more are stuck in low-wage jobs or are working part time because they can’t find full-time work.
As Peter Gordon writes, there’s a lot of confusion about income inequality, in no small part because we don’t measure it very well.
Most reports of increasing inequality are flawed; comparing statistical groups over time is meaningless; the key measure is economic mobility as seen via panel data; the rare panel data we have are inadequate; the most upwardly mobile, the immigrants, are excluded.
Back to Casselman’s observation that for many the economy hasn’t improved. We noted the wide disparities within our state in this post. That’s why our priority continues to be expanding the culture of opportunity and shared prosperity to every part of Washington.
