Washington’s chief economist Wednesday forecast a slow recovery that will not return state revenues to fiscal 2008 levels until 2011.
Income from sales, business and occupation, and other taxes continues to fall below predictions – even those made as recently as March, said Arun Raha, who became Washington’s top economist just as the Sept. 15 bankruptcy of Lehman Brothers threw the national economy into a tailspin.
Washington’s economy “hit the wall” in the fourth quarter and has struggled for traction ever since, Raha told an Association of Washington Business meeting at The Davenport Hotel in Spokane.
Raha said consumers have stopped buying cars and houses – transactions that generate substantial shares of state revenue. Exports that have helped get Washington through past recessions have plummeted, he said.
But, Raha noted, Boeing Co. has a much fatter book of orders than it did coming out of the 2000-’01 recession. That will help the state recover with the rest of the country instead of lagging, as it has in the past, he said.
Raha said the S&P 500 index anticipates a national recovery starting late this year, but the turnaround will take time. Washington will continue to lose jobs until late in 2010, he said.
Tuesday, the Employment Security Department reported an April unemployment rate of 9.1 percent in April, and a decrease of 80,000 jobs over the past 12 months.
Raha said expectations of a recovery presume a return to normalcy in credit markets later this year.
“We’re doing the right things to get there, but we’re not there yet,” he said.