State economist: Optimism, State Revenues Strong
Washington's economy is robust, with healthy tax collections, low unemployment and strong consumer and business confidence, according to an update from the state's chief economist at AWB's Lobby Lunch Thursday.
However, international trade policy remains uncertain, which is a challenge for Washington state, as one of the country's top exporters. And the current economic expansion, which began in 2009, is the longest in recent history.
"There is a slowdown in this forecast, but it's still continued growth," said Steve Lerch, executive director of the Washington State Economic and Revenue Forecast Council.
Lerch’s remarks came shortly before Wednesday’s scheduled revenue forecast. A preview of the revenue forecast showed that state government tax collections continue to rise. Revenue collections since the state's November forecast are $169 million above expectations, Lerch said. In December, real estate excise taxes were $74 million above projections due a flurry of sales before a new real estate tax kicked in on Jan. 1.The state and national job growth was below the 2018 averages, but is still healthy. And hourly earnings are increasing but the growth in that part of the economy has slowed somewhat.
And last year was tough for Washington exports, Lerch noted. Exports to China, Canada, South Korea and the United Kingdom were down, while Japan showed a small increase.
"I still think there's plenty of risk around trade policy for the U.S. economy, and for the Washington economy, where we're so dependent on international trade," Lerch said.
Lerch also highlighted a slowdown in housing, which has been an area of significant concern for Washington employers and employees alike.
"We think that…residential construction basically peaked last year and that we're going to see a bit of a gradual slowdown," Lerch said.
In February 2019, there were more than 48,000 housing permits issued in Washington. Lerch's report shows a gradual leveling off over the next several years, with a projection of about 41,000 housing permits in 2025.
Still, Washington's economy continues to outperform the rest of the country, including the manufacturing sector, which expanded in January.
"Manufacturing has been healthier here in Washington than it has been nationally," Lerch said.
Other highlights from Lerch's report include projections for steady or rising employment, and personal income growth.
One other chart jumped out in his report: state revenue collections have almost doubled since 2010.
Based on the revenue preview — and Lerch’s comments on Thursday — it appears likely that growth trend will continue with next week’s official revenue forecast.