Today the Washington Economic & Revenue Forecast Council released the February economic and revenue forecast.

The forecast for state funds for the 2009-11 biennium is $118.2 milion less than expected in the last forecast in November.  The reduction in state revenue is down because of a $149.7 milllion reduction associated with the DOT Foods Supreme Court decision. The increase in caseloads, the DOT Court decision, and other factors resulted in the net loss of $118 million.

If only economic factors were considered the forecast would be up by $31.5 million.

The forecast shows that economic events and revenue collections continue to unfold as was anticipated in November. However, Washington’s economy is still in the early stages of recovery so risks reported in the preview released February 5 remain serious.

Details

• Continued tight credit for small businesses poses a significant challenge for recovery and will slow down the recovery in jobs.
• Though consumer confidence is improving, this is tentative. Confidence is expected to continue to improve as the job situation improves.
• House marketing indicators are signaling a potential turnaround. Single family housing starts, sales and prices have begun to firm-up, despite the overhang of excess housing which has yet to be absorbed.
• The state’s economy continues to lose jobs but the rate has slowed to a trickle in recent months and growth in some sectors has already turned positive.
• Construction employment continues to decline. It is estimated there is a one-year lag between turning points in permits and turning points in housing related construction employment.
• Washington’s manufacturing sector is poised for a rebound
• Washington’s personal income is now growing moderately.

Though things seem to be improving it is important to note that downside risks remain significant.