Wash. – The Washington State Economic and Revenue Forecast Council creates four forecasts each quarter for the state’s economy and unemployment numbers. This includes a baseline forecast – which is the most likely to happen – the pessimistic, optimistic and a revenue forecast based off the governor’s office’s economic forecast.
The pessimistic forecast predicts a recession coming at the end of 2022 and going into 2023. A recession is a national concern for economists as the Federal Reserve continues to adjust interest rates to try to lower inflation.
The Executive Director and Chief Economist for the council Steve Lerch said the June unemployment numbers show jobs are still increasing, which doesn’t signal a recession yet. However, it has been difficult to create forecasts because of the impacts of the pandemic and the conflict between Russia and Ukraine impacting oil prices.
If a recession does come, Lerch said it shouldn’t be as bad as the last one.
“I don’t think it would be anything like the 2007 – 2009 recession,” he said. “We basically have to go back to the Great Depression for something that looks like that.”
During that recession, unemployment in Washington reached 9.3%. If we go into a recession this year, the unemployment rate is expected to increase slowly to about 6.5 to 6.6%.
Right now, Washington’s unemployment is at a historic low at 3.9%
However, according to Lerch, some experts say the United States has already entered a recession because the Gross Domestic Product (GDP) was negative during the last quarter. He doesn’t think that’s the case.
“It’s a little bit hard to see that when we keep having gains in employment both nationally and here in Washington,” Lerch said.
Lerch believes construction could be affected by a coming recession as the demand for homes begins to slow down. He also said the hospitality industry could be hit again.
“In the hospitality industry, we’ve seen huge gains in employment but that’s after we saw really really huge declines,” Lerch said. “As we have this new variant Omicron and cases continue to rise that’s something that could really impact those business.”
Meanwhile, the baseline forecast predicts the economy will continue to grow but at a slower rate. In Washington, the unemployment rate is expected to increase slightly to around 4.5%.
“We’re continuing to see growth in economic activity both nationally and here in Washington,” Lerch said. “We think that Washington will continue to see a little bit stronger growth than the nation as a whole.”
