There was also some good news, however, in state revenue forecaster Arun Raha’s predictions Thursday.
“It increasingly appears that we are finally approaching the end of this `Great Recession,’” he said. The bottom of the recession seems near, he said, and the “freefall” declines in economic indicators are easing. Critically, he said, 10 large banks have been deemed healthy enough by federal regulators to begin paying back billions of taxpayer dollars.
“Things are beginning to move sideways rather than due south,” Raha said. “In today’s economy, sideways is good, because that is the start of a recovery.”
Still, he said, home prices in Washington will likely continue to drop until the end of the year. The state’s unemployment rate, now at 9.4 percent, is expected to rise to 10.6 percent by mid-2010. Construction jobs, in particular, are likely to decline throughout much of next year he said, and many of the building-boom jobs “have gone away for good.”
The good news: Boeing still has a long list of aircraft orders, and demand remains good for single-aisle jetliners. Microsoft’s balance sheet is healthy, Raha said, with “robust” product development in the works. And the state will likely get an “afterburner kick” to the economy in late 2011, as international trade rebounds. Exports have dropped by a third as other countries were hit harder by the recession.
One big unknown is consumer spending. People are still sitting on their wallets, with a savings rate of 5.7 percent. Although auto sales have stabilized nationally, Raha said, the trend in Washington is still downward. Light truck sales, in particular, remain down, presumably due to less buying for construction work.
Raha thinks that spending will rebound sharply. There’s a lot of pent-up consumer demand, he said, and the savings rate shows that people have money in the bank. Last year’s holiday shopping season was one of the worst on record for retailers, he said. This year’s, he says, could be much different.
“That’s the biggest wild card in our forecast,” he said.