Transcript State Economic & Revenue Outlook Apr 2009

Economic Outlook
Presented to
Pacific Northwest Regional Economic Conference
Steve Lerch
Chief Economist
May 17, 2013
Spokane, WA
WASHINGTON STATE
ECONOMIC AND REVENUE FORECAST COUNCIL
Summary
• The Washington economy continues to grow at a
slow but steady pace
• The Seattle area economy is growing faster than
the rest of the state
• Residential construction and home prices continue
to recover in Washington
Economic Outlook
• The impact of Washington’s marijuana legalization
initiative is very uncertain at this time
17 May 2013
Slide 1
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
The decline in employment has been
severe
Washington Employment after Business Cycle Peak
10%
Cumulative Growth
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
0
Economic Outlook
17 May 2013
Slide 2
5
10
15
2007-09
20
25
30
2001
35
40
45
50
1981-82
55
60
Months
Source: WA ESD, ERFC; data through December 2012
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Employment change from prerecession peak (thousands)
Construction
Manuf ex aerospace
Aerospace
Retail trade
Software
Finance
Prof & bus services
Health care
St & loc govt ex educ
Economic Outlook
17 May 2013
-100
-50
0
50
All other
WA State Employment Security Dept, ERFC; data through March 2013
Slide 3
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Unemployment will remain high
Unemployment Rate, SA
11
Forecast
10
Percent
9
8
7
6
5
4
3
2000
Economic Outlook
17 May 2013
Slide 4
2003
2006
U.S.
2009
2012
2015
Washington
Source: ERFC February 2013 forecast; actual through 2012 Q4
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Initial unemployment claims are
declining
Weekly initial claims, 4 week moving average (SA)
January 2006 = 1.0
2.5
2.0
1.5
1.0
0.5
2006
Economic Outlook
17 May 2013
Slide 5
2007
2008
2009
2010
Washington
2011
2012
2013
U.S.
Source: US Dept of Labor/BLS; data through May 2013
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
1600
5000
1200
3750
800
2500
400
YTD
0
17 May 2013
Slide 6
1250
0
03
Economic Outlook
Backlog
Excludes the
military’s
new
refueling
tanker
Orders & Deliveries
Boeing has 7 years of commercial
orders on its books
04
05
06
07
Net Orders
08
09
10
Deliveries
11
12
13
Backlog
Source: Boeing, data through April 2013
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Single-family home prices continue to
increase
Case Shiller Home Price Index, SA
Feb 2013
Year–over-year percent Change
25
U.S. is up
9.4%
20
15
Seattle is
up 9.3%
Percent
10
5
0
-5
-10
-15
-20
-25
2001
Economic Outlook
17 May 2013
Slide 7
2003
2005
2007
Seattle
2009
2011
2013
Composite 20
Source: S&P/Case-Shiller; data through February 2013
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
WA multi-family building permits are
improving
Washington Housing Units Authorized by Building
Permits, 3MMA, SAAR
50
45
40
Thousands
35
30
25
20
15
10
5
0
1970
Economic Outlook
17 May 2013
Slide 8
1975
1980
1985
1990
1995
Multiple
2000
2005
2010
Single
Source: U.S. Census Bureau; data through March 2013
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Seriously delinquent mortgages
declining more slowly in WA
Thousands
WA = 6.6%
U.S. = 6.8%
5,000
100
4,000
80
3,000
60
2,000
40
1,000
20
0
0
2008
Economic Outlook
17 May 2013
Slide 9
Thousands
Seriously Delinquent Mortgages
Seriously
delinquent
mortgages,
2012Q4:
2009
2010
2011
U.S.
2012
WA
Source: Mortgage Bankers Association; data through 2012 Q4
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Seattle employment declined
further but has recovered faster
Thousands
1,520
1,500
1,480
1,460
1,440
1,420
1,400
1,380
1,360
1,340
1,320
1,300
2006
Economic Outlook
2007
2008
2009
Seattle metro
2010
2011
2012
2013
Rest of state
17 May 2013
Source: Employment Security Dept., ERFC
Slide 10
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Seattle area has most of recent
growth in building permits
Housing Units Authorized by Building Permits
30,000
25,000
20,000
15,000
10,000
5,000
0
2004
Economic Outlook
17 May 2013
Slide 11
2006
Seattle metro
2008
2010
2012
Other Washington
Source: U.S. Census Bureau, ERFC
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
WA personal income will recover
slightly faster than the U.S.
Real Personal Income
Date peak
regained:
1.20
2012Q1
U.S.:
2012Q2
Index, 2012Q3 = 1.0
WA:
Forecast
1.15
1.10
1.05
1.00
0.95
0.90
0.85
0.80
2005
Economic Outlook
17 May 2013
Slide 12
2007
2009
Washington
2011
2013
2015
2017
U.S.
Source: ERFC March 2013 forecast; historical data through 2012Q4
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Revenue forecast track record,
2011-13 biennium
Initial forecast,
Feb 2010:
$32.2 B
Mar 2013:
$30.5 B
2,000
1,500
1,000
500
0
-500
-1,000
-1,500
Jun-10
Economic Outlook
17 May 2013
Slide 13
Nov-10
Jun-11
Forecast Change
Nov-11
Jun-12
Nov-12
Leg. Change
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Revenue Act collections are still on an
upward trend
$millions SA
Collections
were up 7.1%
year-over-year
for first quarter
2013 activity
(February 11,
2013–May 10,
2013
collections)
1000
900
800
700
600
2002
2004
2006
Revenue Act Revenue
Economic Outlook
17 May 2013
Slide 14
2008
2010
2012
3-Month Moving Average
* Adjusted for large one-time transactions, amnesty payments and reporting frequency change,
current definition of Revenue Act
Source: DOR and ERFC; monthly data through estimated March 2013 activity
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
REET still showing growth after
end-of-year rush
2012 real estate
sales were
elevated due to
the incentive to
claim capital
gains before
taxes increased
in 2013, with a
particularly large
rush at the end
of the year.
Sales since the
rush have been
stronger than
expected but a
current shortage
of houses for
sale might limit
short-term
growth.
Economic Outlook
17 May 2013
Slide 15
$Billions
Seasonally Adjusted Taxable Real Estate Excise
Activity
10
9
8
7
6
5
4
3
2
1
0
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: ERFC; Monthly data through April 2013 preliminary
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Conclusion
• The Washington economy is expected to outperform
the U.S. economy but only slightly
• Positives include the aerospace, software, and
construction sectors; non-education state and local
government employment continues to contract
• The revenue forecast has stabilized and collections
are at or approaching recent historic averages
Economic Outlook
17 May 2013
Slide 16
WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL
Questions
Economic Outlook
17 May 2013
Slide 17
Economic & Revenue Forecast Council
1025 E. Union Avenue, Suite 544
Olympia WA 98504-0912
www.erfc.wa.gov
WASHINGTON STATE ECONOMIC
AND REVENUE FORECAST COUNCIL
360-534-1560