Arun Raha-State Eco Revenue Outlook

18 Pages·2009·0.13 MB·English

State Economic & Revenue Outlook
Presented to
Washington Chapter: National Institute of
Governmental Purchasing
Arun Raha
Executive Director
January 14, 2009
Washington State Economic and Revenue Forecast Council
Overview
• Credit to consumers and business is still
mostly unavailable
• Financial sector woes have spilled over into
the real economy
• The U.S. economy has been in recession
since December 2007
• Washington’s economy has lagged the U.S.
into the downturn, but will lead it in the
recovery
Arun Raha • State revenue collections will be affected
WA Economic & more severely, because this is a consumer
Revenue Outlook
led recession
14 Jan 2009
Washington State Economic and Revenue Forecast Council
Slide 1
Banks are now able to borrow
from each other
USD 3m LIBOR - 3m US T-bill Spread
Basis Points
Bailout
500 passes
The spread
450
indicates
Lehman collapses, Merrill taken over
the
400
by Bank of America
premium
350 Fannie & Freddie taken
banks have
Bear Stearns hedge
over by government
to pay to fund in trouble over
300
borrow subprime portfolio Bear
250 Stearns
from each
collapse
HSBC and New
other
200 Century Financial
report losses on
150
subprime mortgage
bonds AIG
100
collapse
50 BNP Paribas freezes
3 funds
Arun Raha 0
Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov-
WA Economic &
07 07 07 07 07 07 08 08 08 08 08 08
Revenue Outlook
14 Jan 2009
Source: British Bankers Association, US Federal Reserve Bank, ERFC; data through
January 8, 2009
Washington State Economic and Revenue Forecast Council
Slide 2
But lending to businesses and
consumers remains mostly tight
Net Tightening minus Easing
Percent
There is
100
some
anecdotal
80
evidence
that credit
60
conditions
eased a
40
little late in
the year
20
for credit-
worthy car
0
and home
buyers
-20
Arun Raha -40
00 02 04 06 08
WA Economic &
Revenue Outlook For large and medium firms For small businesses
Credit cards Other consumer loans
14 Jan 2009
Source: Federal Reserve Board, Senior Loan Officers Quarterly Survey, data through
Oct 2008 survey
Washington State Economic and Revenue Forecast Council
Slide 3
Consumer sentiment is lower
than in previous recessions
Index
Mich: 1966Q1 = 100, SA
Conf Board: 1985 =100, SA
Conference
Board 150
measure
was its
lowest ever
120
recorded in
October,
and then
90
fell even
lower in
December
60
Arun Raha 30
WA Economic & 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Revenue Outlook
U Mich Conf Board
14 Jan 2009
Source: University of Michigan; Conference Board; data through December 2008.
Washington State Economic and Revenue Forecast Council
Slide 4
Automotive sales have tumbled
nationally, and in Washington
25 80
Auto Retail
s
Sales: n
o
20 64 li
l
US units R mi
A
sold A D
S S
15 48 U
V. s,
t s,
i
n e
USD value U l
a
n 10 32 S
of WA auto o r
dealer Milli ale
e
sales 5 16 D

A
W
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Arun Raha
WA Economic & US Light Trucks US Cars WA Auto Dealer Sales Tax
Revenue Outlook
14 Jan 2009
Source: Autodata Corporation, WA Dept. of Revenue, ERFC estimate for 2008 Q4
Washington State Economic and Revenue Forecast Council
Slide 5
State housing permit activity has
slowed, similar to the national
economy
Thousands, annualized units, 3 MMA, SA
4000 80
3500 70
3000 60
2500 50
S. A
. 2000 40 W
U
1500 30
1000 20
500 10
Arun Raha
0 0
WA Economic & 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Revenue Outlook
U.S. WA
14 Jan 2009
Source: Census Bureau, Data through November
Washington State Economic and Revenue Forecast Council
Slide 6
Vacancy rates show continued
demand for multi-family housing in
Washington
Homeowner
• Homeowner vacancy
3
t rates in Washington
n 2
e
c
r are rising, but still
e 1
P
lower than national
0
1990 1993 1996 1999 2002 2005 2008 vacancy rates
YTD
U.S. Washington (+/- 0.3)
Rental
12
• Rental vacancies are
t
n 8
e low in Washington
c
r
e 4
P
Arun Raha 0
1990 1993 1996 1999 2002 2005 2008
WA Economic &
YTD
Revenue Outlook
U.S. Washington (+/- 1.0)
14 Jan 2009
Source: Bureau of the Census; data through 2008 Q3
Washington State Economic and Revenue Forecast Council
Slide 7
WA construction employment:
All types are declining
Thousands, SA
110 50
100 40
s
e g
R g
- 90 30 n
n E
o
&
N

y
& v
80 20 a
s
e
e
H
R
70 10
Arun Raha 60 0
00 01 02 03 04 05 06 07 08
WA Economic &
Revenue Outlook
Res & related Non-res & related Heavy & Eng
14 Jan 2009
Source: ERFC, data through November 2008
Washington State Economic and Revenue Forecast Council
Slide 8
Non-farm payroll employment
growth forecast: U.S. v WA
Percent change, year ago
Slowing
8
growth in
Washington,
6
but we will
outperform
the national 4
economy
2
0
-2
Forecast
Arun Raha
-4
WA Economic & 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Revenue Outlook
Washington U.S.
14 Jan 2009
Source: ERFC forecast; Bureau of Labor Statistics - actual data through December
2008, WA actual data through November, 2008
Washington State Economic and Revenue Forecast Council
Slide 9