State revenue forecast now more pessimistic

The state
economic forecast for the next two years, released today, tells a story of uncertainty.
Even the rhetoric of the state Economic and Revenue Forecast Councils (ERFC) report
is chary, replacing the last few months Its improving! attitude with something
akin to Its getting worse, but the rate at which its getting worse might be
slowing.

With increased stock market volatility and an international GDP
predicted to remain unstable through 2012, projected general fund and state
revenues have been decreased by $1.4 billion for the 2011-13 biennium.

State unemployment,
at 9.1 percent in August, has remained steady in the past three months, with
job growth in some areas offsetting losses in others. Even positive outlooks
contain caveats, as the manufacturing and service sectorsprevious bright spots
for job growthare reported to be slowing in their increase. However, the ERFC projects
that Washington
will recover in its unemployment rate slightly faster than will the nation as a
whole; it makes the same prediction for personal income.

Despite
these small examples of optimism, general fund and related fund revenue for the
last biennium came in at $25 million below Junes forecast, and Washington state isnt
out of the woods yet. The most likely scenario for the end of this year,
according to ERFC, is an extended period of muddle-through. Washingtonians’ personal income has declined 4
percent during the recession, and is $4.6 billion lower than reported in June.

However, positives to come out of
the forecast are growth in aerospace and export. The report cites Boeing as
having stable contracts for the next seven years and beyond, a bolster to those
industries. Software publishing jobs have also increased, especially given the Puget Sound areas increasingly recognized reputation as
a tech hotbed.