OLYMPIA — Washington's economic outlook for the current budget cycle has gone from cautiously optimistic to “a sinking feeling of pessimism,” the state's chief economist said Thursday.
“The risk of the economy slipping back into recession has increased significantly,” Arun Raha said in the latest economic and revenue update.
In June, Raha was confident that Washington and the rest of the United States would avoid a “double dip recession” and that growth would continue, although slowly.
Since then, debt problems have spread beyond in Europe, the U.S. government barely avoided a default on U.S. bonds but couldn't escape a downgrading by a major rating agency, and consumer confidence “is in the tank.”
State job growth hasn't been as strong as projected, the single-family housing construction sector remains flat, banks and local governments have been laying off workers and about the only manufacturing sector growing is aerospace.
Oh, and by the way, state revenue collections are down about $9 million below forecast since June.
The next full revenue forecast is due in mid September. A significant drop in projected revenues could lead to a call by some legislators for a special session to make deeper cuts, sooner.
State agencies already were ordered to identify ways they could cut their budget by as much as 10 percent.