Washington State’s chief economist, Arun Raha, has updated his revenue forecast for the state for June, and the upshot is that projections for the 2011-13 biennium are down $183 million. It’s become habit the last few years for Raha to trot out an analysis that shows a near-term plateau, with a soft recovery in the offing, perhaps six months or more out. Raha is scrupulous about noting that even a mild recovery is predicated on fair economic winds, it’s just that, regularly, the economic winds do not blow fair.
This time, it’s Japan:
The repercussions from the disaster in Japan have turned out to be worse than we had thought. Not only did it constrain consumer spending by not having enough goods available, but it also put a crimp in the remarkable recovery that had been unfolding in the U.S. manufacturing sector.
It’s high gas prices:
The main reason why the 2% cut in payroll taxes this year has not been as stimulative to the economy as anticipated is because half of that tax cut is going overseas to pay for imported petroleum products.
It’s the chicken-and-egg of lackluster employment and consumer demand:
The economy added 8,400 net new jobs in March and April. There was no job growth in May. Over the three months, we had expected 14,800 jobs in our March forecast.
That means the litany continues as per usual, with construction still feeble, housing prices in a double dip, and foreclosures still high (Seattle Bubble looks into recent dips).
Even so, the news is not all bad: “Aerospace and software are expanding again,” with Boeing announcing a major push in production of 737s. The airplane manufacturer has already hired 4,300 employees since last May. And as Japan rebuilds, it will likely be purchasing from one of its mainstay exporters, Washington State. And without legislative action to increase revenues (and budget cuts), that $183 million reduction would be worse than it is. As it is, reports the Seattle Times, “estimated reserves stand at a relatively skimpy $163 million.” (Seattlepi.com has an amusing–really!–story on the difficulty pinning down a non-squishy number.)
Raha leaves no room for doubt that we remain in an uncertain position, with downside risks roughly four times that of upside. As the graph up top illustrates, the state has registered unemployment at 9.1 percent or above for the past two years, which contributes to many of Washington’s economic ills: foreclosures, lack of consumer confidence, lack of consumer demand, and lower tax revenues. (Washington’s underemployment rate is worse.) As Raha notes, with no state or federal projects to boost hiring–the opposite is true, as governmental workers are laid off–new hiring will have to be in the private sector.
What the hell is the first graph? No labels on the axes, but a helpful blue square (against an identical blue background) that says ‘unemployment rate’. Sadly, those numbers seem to have nothing to do with the y-axis.
And, given that the article seems to focus on Raha’s numbers, wouldn’t it make a lot more sense to show how his numbers have changed over time (given that you talk about it changing $183 million – from what??) We’ve got 2 unemployment graphs combined with a discussion of state revenue.
Clearly unemployment is important (and depressing), but these graphs are just ‘look nice’ things.
Hey, *you* try making a graph in Excel these days. I remember when you could just make a graph with a single line. I have no idea why it placed the data points in the middle, when they belong at the top. Anyway, unemployment is more than important–I’m arguing it’s the crux of the state’s economic failure. Right *there* is the missing demand, the missing tax revenue, etc., and it’s chronic. It would be an almost perfectly flat line for the past two years, except for the recent revision of the unemployment numbers upward in early ’10.
I hear you, MvB! Excel has turned into a complete piece of crap as far as making graphs goes. I actually thought this had come from the State, which would be more inexcusable. (hell, they have unlimited resources, right?)
I’m no expert on this economic stuff – apparently nobody is, as far as I can tell. But I do now data and data presentation. Having a $183 million shortfall sounds really, really bad. But if the expected revenue was $500 million would be a far different story than if it were 2 billion. Or 20 billion. I’m just asking for context and data.
Ha! Then I have a funny story for you!
http://blog.seattlepi.com/seattlepolitics/2011/06/16/and-the-number-is-whatever-you-say-it-is/
Good Lord, someone save us! (Batman, Spiderman, Bueller??)
I had a colleague a while back (very conservative) who insisted that the best way to manage gov’t operations was to keep pushing them down the stack, from federal, to state, to city…. I could only imagine that he’d never seen the details of State vs federal employees’ output. Yeah, the feds have their issues, but nothing like these mooks.