In a memo prepared for next month’s meeting of the Governor’s Council of Economic Advisers, the state Office of the Forecast Council remains pessimistic about the economy over the next two years.
In the “Preliminary November 2011 Economic Forecast,” the office says most economic measures are confirming the dour September forecast that drove the state’s budget hole into the $2 billion range. Those indicators that showed more positive results were due to the fact that the September forecast had such low expectations.
Here’s what it says about the national economy:
The U.S. economy did not worsen in the last month, but the outlook remains extremely uncertain. Europe is tottering on the brink of recession and it remains to be seen if the firewall being contemplated around their banks will be able to head off a global credit crunch. China and India are slowing, on purpose, as their governments move to cool overheating economies
Here at home, political dysfunction at the federal level has dashed any hope that fiscal policy will be able to lend monetary policy a hand in stabilizing the economy. Fear and uncertainty have paralyzed consumers and businesses who continue to sit on their cash. Our forecast last month of a muddle through economy, with flat growth, high unemployment and weak confidence, appears to be coming true. Data releases in the last month were mildly encouraging, but only because expectations were so low.
The report also reflected a poor September state jobless report, in which the state lost 4,400 jobs, mostly in government.
On state housing: “Both single-family and multi-family housing did a little better than expected but our expectations were low.”
In summary, the report does not provide much hope for a helpful November revenue forecast.
“We continue to believe the Washington economy will outperform the U.S. economy. Washington is benefiting from strong export growth and hiring a both Boeing and Microsoft. However, the national outlook has weakened, as noted above, and this is reflected in a weaker state forecast as well.”
Here’s a link to the entire report.