Focus on the fundamentals
No one knows when the next recession is going to arrive. Unfortunately, in much of the state, it feels like we haven’t really recovered from the Great Recession with stagnant employment growth outside of the Puget Sound region.
But there are enough warning signs to suggest that lawmakers – and voters – should pay attention to the fundamentals of Washington’s economy in the coming months — fundamentals like agriculture, manufacturing and small business.
These are important sectors that may be overlooked amid the tech boom in the Puget Sound region, yet they still drive the economy in big parts of the state.
The latest economic revenue forecast is one reason for concern. State Chief Economist Steve Lerch announced in February that Washington’s economy is beginning to slow, and officials now expect to take in less in tax revenue over the next few years than previously forecast.
Lerch was careful to point out that tax collections are still expected to go up, just not at the level previously predicted.
Among the reasons for the slowing growth: lower exports, a weaker U.S. manufacturing sector and a strengthening U.S. dollar.
Washington exports dropped for the first time since 2009, some of which is due to the months-long West Coast ports slowdown in late 2014 and early 2015.
Nationwide, exports of U.S.-manufactured goods fell 6.4 percent last year, too.
Another worrisome sign: small business confidence. It’s still lagging, Lerch said, as business owners recall what happened in the not-too-distant past.
And don’t forget that some rural communities have been hit by flood damage, unprecedented fire seasons and the loss of good-paying manufacturing jobs.
It isn’t all doom and gloom, though. Although the current economic expansion is old enough to suggest a recession is due, Lerch noted that economic expansions don’t die of old age. Something triggers a recession, and for now he isn’t ready to predict one.
So regardless of whether a recession is looming just around the corner or years from now, it makes sense to do everything we can to keep the economy growing. Rather than passing new laws and regulation that drive up costs for employers, we need to keep the focus on helping employers expand opportunity for everyone.
Adding more cost, whether through a carbon tax ballot initiative, a minimum wage initiative or a carbon cap rule imposed by the governor, could mean the difference between a food processor choosing to expand in Washington or looking south to Oregon.
Or a small business owner adding a new employee or closing the doors.
Keep in mind that Washington is already a high-cost, high-tax state for business with employers paying 58 percent of all state and local taxes.
Employers are doing their part to grow and expand. They’re resilient and creative, retrofitting old facilities to make them cleaner, starting new businesses that make sustainability a core value, and innovating new products that protect the environment.
If we’re fortunate, the current economic expansion will keep rolling for several more years.
But it isn’t completely up to chance. Lawmakers and voters will have some say in the matter.