September Report of State Forecast Council Slightly Improved

By Jim Cline

A couple recent reports of the Washington State Economic and Revenue Forecast Council released this past week, shows some modest good news.  The “Economic and Revenue Update” highlights include its finding that “Washington employment, income, and housing are doing as well or better than expected but exports are weakening.” It also reports State government revenues as slightly higher than forecasted “mainly due to higher-than-expected real estate excise tax receipts.”

The Companion report released September 6, by the Council provides a more detailed review of state and national economic developments.  It describes state conditions faring somewhat better than national conditions:

Recent developments at the state level have generally been a bit stronger than expected in the June forecast. Employment growth in recent months has slightly outpaced the modest growth we expected in June. Personal income is tracking above our forecast in early 2012 due mainly to very strong wage growth in the first quarter. Housing construction was stronger than expected in the second quarter and Seattle area home prices are now higher than in the previous year. The strengthening housing market is also reflected in the recent Seattle consumer price index data where rising rents are driving Seattle inflation above the national average. On the downside, Washington exports have weakened considerably due to slower growth overseas.

It attributed the slowing state exports to the slowing global economy.  It summarizes that on balance, the September conditions are improved from previous forecasts:

Overall our preliminary September economic forecast for Washington is a bit stronger than the forecast adopted in June. Our new Washington employment growth forecast for 2012 through 2015 averages 2.0% per year compared to 1.7% per year in the June forecast. We expect employment growth to average 1.7% per year in 2016 and 2017. Our new forecast for personal income growth averages 5.2% per year in 2012 through 2015 compared to 4.8% per year in the June forecast but the increase is due almost entirely to the higher actual level of personal income in early 2012. We expect personal income growth to average 5.2% per year in 2016 and 2017 as well.