With latest monthly economic and revenue update, state revenue collections up 9.5% over November forecast.

Yesterday’s update from the state Economic and Revenue Forecast Council continues the run of good news for budget writers. The ERFC delivers a new official revenue forecast tomorrow. The latest numbers suggest strong reason to expect an upward revisions.

Here’s the summary from the update:

  • U.S. employment increased by 379,000 jobs in February; the unemployment rate declined to 6.2%.

  • U.S. real GDP increased by 4.1% in the fourth quarter of 2020.

  • U.S. new and existing home sales continued to grow in January.

  • U.S. consumer confidence remains below pre-pandemic levels.

  • Washington’s unemployment rate declined to 5.6% in February.

  • Seattle-area consumer price inflation matched the national average.

  • Major General Fund-State (GF-S) revenue collections for the February 11, 2020 – March 10, 2021 collection period came in $170.9 million (11.7%) higher than forecasted in November, primarily due to Revenue Act tax collections.

  • Cumulatively, collections are now $763.5 million (9.5%) higher than forecasted.

As the charts below show, collections are back to pre-pandemic trend.

Other points from the update suggest continued economic weakness, particularly in hard-hit sectors.

We have four months of new Washington employment data since the November forecast was released. Total nonfarm payroll employment increased 15,800 from October through February which was a 66,800 less than the increase of 82,600 expected in the forecast. Private services-providing sectors added just 8,200 jobs in the four-month period, weighed down by the loss of 8,200 jobs in leisure and hospitality. The manufacturing sector managed an increase of 1,800 jobs in spite of the loss of 1,700 aerospace jobs. Construction employment increased by 4,200 jobs and state and local government employment increased by 4,900 jobs. Federal government employment declined by 3,200 jobs of which 1,600 were temporary Census workers.

Again, the next official forecast will be released tomorrow. With revenues recovering strongly and the infusion of federal funding, it’s very difficult to understand why anyone would consider this to be a good year to raise taxes for the operating budget.