The recession was much more severe than the Washington State Economic and Revenue Forecast Council had believed in June, according to the group’s preliminary September forecast memo.
The annual revision to the national income and product accounts shows that the peak-to trough decline in real GDP was actually 5.1 percent, not 4.1 percent. Personal income was also revised much lower. The peak to trough drop in nominal income is now 5.6 percent compared to 3 percent. The council says there is no reason not to expect a similar downward revision to Washington personal income when the comparable data for the states are released next month. Washington’s job market has also been weaker than was expected in June, according to the memo. The economy added 6,800 net new jobs in June and July. The forecast had expected 9,200 jobs.
Single-family housing continues to languish, the council says. The 12,600 single-family permits issued during the second quarter of 2011 were the lowest since the second quarter of 2009. However, multi-family permits came in at a relatively strong at 13,400 units in the quarter.
The Washington economy is benefiting from strong export growth and hiring at both Boeing and Microsoft. However, the memo says these advantages to the regional economy will not outweigh the drag from the weakening national economy.
The council’s job growth forecast for 2011 is unchanged at 1.2 percent, but it now expects 1.6 percent growth in 2012 and 2.3 percent in 2013 – compared to the 2.2 percent per year expected in the June forecast.
The personal income growth forecast is now 4.9 percent, 3.2 percent and 4.6 percent in 2011, 2012 and 2013 – compared to 5.1 percent, 4.4 percent and 5.3 percent. The council also does not expect to see a significant upturn in housing construction until the first quarter of 2013, two quarters later than assumed in June.