Cautious consumers and regional banks burdened with bad debts could trigger a second “dip” to a double-dip recession in Washington, the state’s lead economic forecaster said today.
Arun Raha, executive director of the Washington State Economic and Revenue Forecast Council, said single-family housing starts are down 75 percent from the peak of two years ago, and “multi-family is dead.”
Commercial construction has plunged, he said, and there is more downside to go. Hiring for residential building may start to recover by mid-2010, but prospects are bleak for new commercial activity before the end of next year.
Raha said another contraction in credit is possible as regional banks struggle with bad loans made to contractors.
He said manufacturing is starting to recover, but the service sector is still shedding jobs. Employers probably will not start hiring until the spring, he said.
Slow construction, poor auto sales and deflated real estate values have sapped state revenues, Raha said, he does not foresee a return to 2008 levels until 2012.