As last words go, it’s hard to beat the exuberance of, “Hey, y’all, watch this!”

The political equivalent may be: “It can’t happen here.”

Life has a way of slapping down the boastful. Brash last words always contain an element of irony. The avoidable slides into the inevitable as bystanders wonder, “What were they thinking?”

The nation looks like it’s on a rollercoaster to recession. The stock market soars and plunges like a seagull, banks rein in credit, and cautious rate-cutting by the Fed underscores worries about hard times ahead.

Fannie Mae, which knows something about the housing market, predicts falling home prices. Housing inventories are up, sales slow, and foreclosure rates continue to rise. Millions of adjustable rate mortgages (ARM) will be reset in the coming months, adding to well-stoked fears of an economic downturn.

Merrill Lynch economist David Rosenberg says America may be on the brink of the first consumer-led recession in 17 years. Kriss Sjoblom, economist with the Washington Research Council, calls it a “slow motion” drama, noting that many borrowers will be less likely to qualify when refinancing peaks next March.

The National Conference of State Legislatures reports most states finished the 2007 fiscal year with lower cash reserves than they had the year before. Their analysts anticipate that in FY 2008 revenues will grow just 2.6 percent while spending increases 5.4 percent. Washington’s recently adopted two-year budget is more ambitious, increasing spending by about 15 percent with revenues growing 7.5 percent.

Since lawmakers left Olympia, they got some good news on the revenue side, with the June forecast adding about $484 million. But good news may be harder to find in next month’s forecast.

Sjoblom says the deeper, longer recession here “kept a bit of a damper” on the state’s largest housing market. That, coupled with continued solid job growth at Boeing and Microsoft, suggests that “even if the national economy does slip into recession, Washington’s economy should continue to grow, albeit more slowly.”

So, if we’re very lucky, the looming national recession will pass us by. You know, perhaps “it can’t happen here.” Or maybe it can.

Sjoblom adds the kicker: “What is bothering me is … I was saying the same thing during the summer of 2001,” when Washington and the nation were already in recession before the Sept. 11 attacks.

Eventually – I think sooner rather than later – we’re going to see a sharp slowdown. When the easy money tide rolls out, it’s going to leave a lot of debris on shore. Washington relies heavily on consumption taxes. More than half the state general fund comes from sales taxes. The uptick in the June revenue stemmed from higher-than- expected construction activity and continued strength in consumer and business spending.

For many homeowners, that spending was fueled by easy access to credit. For a lot of us, home equity loans, really second mortgages, replaced savings accounts and fueled consumer spending. At first used to fix up the house, add a garage, or update kitchens, the loans soon began paying for vacations and high-def TVs.

For state and local governments, the boost in consumer spending meant more money in the bank, though it didn’t stay there for long. Lawmakers seized the once-in-a-political-lifetime opportunity to launch new environmental programs, expand health care and boost education spending from preschool to grad school. In isolation, each decision may have been justified. Cumulatively, however, they amount to a promise that will be hard to keep when cash-strapped businesses and households sit on their wallets as credit becomes tight.

As the credit spigot closes, state and some local governments here will feel it quickly. A budget crisis does not require a full-blown economic collapse. Sales tax revenues often contract ahead of a recession, as consumers grow cautious. If governments attempt to maintain spending by raising taxes, they impose more stress on struggling households and businesses, accelerating the economic skid.

State lawmakers set in motion ambitious plans last session, apparently assuming ceaselessly robust economic growth. They may want to apply the brakes in 2008. While Washington may avoid the worst effects of a national slowdown, we will not be unaffected. Hard times can happen here, sometimes arriving with stunning speed.