Economic Review - erfc.wa.gov

Economic Review

September 8, 2021

Washington State Economic and Revenue Forecast Council

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WASHINGTON STATE

ECONOMIC AND REVENUE FORECAST COUNCIL

AGENDA

ECONOMIC REVIEW MEETING

September 8, 2021

10:00 a.m.

Approval of meeting minutes of June 23, 2021

Economic Review:

Presentation of economic outlook and revenue

collection experience

Adjournment


-

STATE OF WASHINGTON

ECONOMIC AND REVENUE FORECAST COUNCIL PO Box 40912 Olympia, Washington 98504-0912 (360) 534-1560

Meeting Minutes Revenue Review

June 23, 2021 Conference Call

Economic and Revenue Forecast Council

Staff

Tim Ormsby, House of Representatives, Chair Christine Rolfes, Senate Lynda Wilson, Senate Ed Orcutt, House of Representatives Mike Pellicciotti, Treasurer Vikki Smith, Department of Revenue

Steve Lerch, Executive Director

Call to Order Representative Ormsby called the meeting to order at 10:02 a.m. Approval of the Minutes Representative Orcutt moved, seconded by Treasurer Pellicciotti to adopt the meeting minutes from June, 9, 2021. Motion passed at 10:03 a.m. Forecast Presentation Dr. Lerch presented information on the economic and revenue forecast. Dr. Lerch summarized the forecast changes. Motion Representative Orcutt moved, seconded by Representative Ormsby, to adopt the economic and revenue forecast. Council approved the motion unanimously at 10:31 a.m. Adjournment With no further business, the meeting adjourned at 10:36 a.m.

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Economic & Revenue Forecast Council State of Washington

Economic Review: September 8, 2021

Executive Summary

United States

This forecast is based on a modified version of IHS Markit's August 2021Control forecast for the U.S. economy. We have adjusted real gross domesticproduct (GDP) to match the August 2021 Blue Chip “Consensus” GDP forecastfor 2021 and 2022. We expect real GDP to increase 6.2% in 2021 which isweaker than the 6.7% growth rate assumed in the June forecast. Ourforecast of GDP growth in 2022 is unchanged at 4.4%. We do not have a newlong term forecast from Blue Chip since the March forecast. For 2023-25, weassume that some of the higher near term growth is offset by weaker longterm growth. We expect growth rates of 2.3%, 2.1%, and 2.0% in 2023through 2025 compared to the June forecast of 2.2%, 2.0%, and 1.9%.

Our oil price forecast reflects the futures markets, primarily the Brent (NorthSea) oil price but also the West Texas Intermediate (WTI) benchmark. Thisforecast was based on the Wednesday, August 25, 2021 closing prices forBrent and WTI futures. Oil prices are slightly lower than expected in the Juneforecast and, as in June, are expected to decline gradually over the forecast.The latest futures prices indicate that the refiner acquisition price of crude willaverage $67 per barrel in the fourth quarter of 2021 compared to $69 in theJune forecast. By the fourth quarter of 2025 the refiner acquisition price ofcrude is expected to average $55 per barrel compared to $56 per barrel in theJune forecast.

National employment in August increased by 235,000 net jobs. Employmentdata for June and July were revised up by 134,000 jobs. Sectors with thelargest job gains in August included professional and technical services(+59,000), transportation and warehousing (+53,000), educational services(+40,000), manufacturing (+37,000), arts, entertainment and recreation(+36,000), local government excluding education (+20,000), personal andlaundry services (+19,000) and information (+17,000). Sectors withdeclining employment in August included food services and drinking places (-42,000), retail trade (-29,000), state government education (-21,000), localgovernment education (-6,000), child day care services (-6,000), temporaryhelp services (-6,000), health care (-5,000) and construction (-3,000).

Two key measures of consumer confidence declined this month. TheUniversity of Michigan (UM) consumer sentiment survey decreased by 10.9points to 70.3 in August. Consumers were less optimistic about both currentand future economic prospects, with COVID, inflation and slower wage growthall cited as concern by survey respondents. The Conference Board index ofconsumer confidence decreased by 11.3 points in August to 113.8. Surveyresults suggest that consumer concerns about increasing COVID cases andrising food and gasoline prices resulted in a less favorable view of currenteconomic conditions and growth prospects over the next six months.

3

Executive Summary September 8, 2021 Economic Review

Initial claims for unemployment insurance decreased by 14,000 to 340,000(SA) in the week ending August 28th. The four-week moving average of initialclaims decreased by 11,750 to 355,000.

Industrial production in July increased by 0.9% (SA) following a revised 0.2%increase in June. Industrial production is 6.6% (SA) above its July 2020level. New orders for core capital goods (i.e., durables excluding aircraft andmilitary), which is a proxy for business investment, increased by 0.1% (SA) inJuly following a revised 1.0% increase in June according to U.S. CensusBureau data.

Residential construction activity slowed in June but new and existing homesales increased. July housing starts decreased by 7.0% (SA) compared toJune but were 2.5% above their July 2020 level. Housing units authorized bybuilding permits in July were 2.6% (SA) above their June level and 6.0%above their year-ago level. New home sales in July increased by 1.0% (SA)compared to June but were 27.2% below their year-ago level. Existing homesales in July increased by 2.0% (SA) compared to June; this was the secondstraight month with an increase in existing home sales. Existing home saleswere up 1.5% compared to July 2020. The seasonally adjusted Case-Shillernational home price index for June was 1.8% above its May level and 18.6%above its year-ago level.

The major threat to the U.S. and Washington economies continues to be thepotential for negative impacts related to COVID-19. Concerns about risinginflation and geopolitical tensions are also forecast risks.

Washington We have two months of new Washington employment data since the June

forecast was released. Total nonfarm payroll employment increased 48,800in June and July which was 900 more than the increase of 48,000 expected inthe forecast. Washington employment is now 143,000 (4.1%) lower than atits February 2020 peak. Private services-providing sectors added 40,800 jobsin June and July. The manufacturing sector added 900 jobs despite the lossof 500 jobs in aerospace manufacturing. Construction employment increasedby 2,000 jobs. State and local government employment increased by 5,000jobs in the two-month period and federal government employment increasedby 100 jobs.

We have also incorporated another quarter of benchmark employment datafrom the Quarterly Census of Employment and Wages (QCEW). The newQCEW data and other revisions added 8,100 (0.2%) to the estimated level oftotal employment in May 2021. Because employment growth in June and Julywas also slightly more than expected, employment is 9,000 (0.3%) higher inJuly than expected in the June forecast.

Washington’s unemployment rate declined to 5.1% in July from 5.2% in June.The unemployment rate is down significantly from the 16.3% rate reached inApril 2020 which was an all-time high in the series that dates back to 1976.At the business cycle peak in February 2020 the Washington unemploymentrate was 4.1%.

As in June, this forecast incorporates Boeing’s announcement of deep cuts tocompany-wide employment continuing through 2021 as well as theconsolidation of 787 production in South Carolina. Boeing indicated they plan

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to reduce employment from 161,000 at the beginning of 2020 to about 130,000 by the end of 2021, a reduction of 31,000 jobs. We assume that Boeing is currently about three quarters of the way through this process. We also assume that the vast majority of cuts will continue to be made in Washington State and that non-Boeing aerospace employment will also decline as a result of lower production rates. Specifically, the forecast assumes that Washington aerospace employment will be 29,400 lower in January 2022 than in January 2020. We have already lost about 22,600 aerospace jobs as of July 2021 and expect a further decline of 6,800 by January 2022.

In June, after the forecast was complete, the U.S. Department of Commerce,Bureau of Economic Analysis (BEA) released state personal income estimatesfor the first quarter of 2021. According to these estimates, Washingtonpersonal income rose from $524.7 billion (SAAR) in the fourth quarter of 2020to $579.7 billion in the first quarter of 2021. The 49.0% increase (SAAR) inWashington personal income was the 46th best among the states and Districtof Columbia and was significantly lower than the 59.7% growth rate for theU.S. as a whole. Once again, changes to personal income from Covid-19relief programs dominated overall personal income growth, accounting for90% of Washington personal income growth in the first quarter. Most of thiswas in the form of another round of direct payments to individuals.Washington’s below average personal income growth was almost entirely dueto a below average contribution of transfer receipts which added 55.3percentage points to U.S. personal income growth but only 44.9 percentagepoints to Washington personal income growth.

Washington housing construction moderated in the second quarter of 2021after reaching its highest level in nearly 43 years. The number of housingunits authorized by building permits fell to 47,600 (SAAR) in the secondquarter from 63,700 in the first quarter. First quarter permits were theirhighest since second quarter of 1978. Second quarter permits consisted of24,300 single-family permits and 23,300 multi-family permits. The Juneforecast expected 52,100 units (SAAR) in the second quarter as a whole,consisting of 29,800 single-family units and 22,400 multi-family units. Thethird quarter got off to a strong start with 58,300 (SAAR) units permitted inJuly consisting of 23,200 single-family units and 35,100 multi-family units.

Seattle-area home prices continue to rise rapidly. According to theS&P/Case-Shiller Home Price Indices, seasonally adjusted Seattle home pricesincreased 1.6% in June compared to a 1.8% increase in the composite-20index. June Seattle home prices were up 25.1% over the year. This was thehighest year-over-year growth in the series with data back to 1990-91growth. In comparison, the composite-20 index was up 19.1% over the year.June Seattle home prices were up 152% since the December 2011 trough andexceeded the May 2007 peak by 75%.

Seattle-area consumer price inflation slightly exceeded the national averagein the year ending in June 2021. From June 2020 to June 2021, the SeattleCPI rose 5.6% compared to the 5.3% increase in the U.S. City Average index.These relatively high rates were partially due to much higher energy pricesthis year compared to last year. Core prices, which exclude food and energy,increased 4.6% in Seattle compared to 4.5% for the U.S. City Average index.Seattle shelter cost inflation trailed the national average at 1.5% compared to

5


2.6%. Seattle inflation excluding shelter exceeded the national average at 7.9% compared to 6.7%.

According to the World Institute for Strategic Economic Research (WISER),Washington exports increased 54% from the second quarter of 2020 to thesecond quarter of 2021. Exports of transportation equipment (mostly Boeingplanes) increased for the first time in two and a half years, rising 241% overthe year. Agricultural exports increased 45% over the year but this ismisleading as the data include soybean and corn exports which receive onlyminimal processing in Washington. Excluding likely transshipments ofsoybeans and corn, agricultural exports probably increased slightly over theyear. Exports from all other sectors (mostly manufacturing) increased 20%over the year.

Washington car and truck sales increased in July after declining in May andJune. The seasonally adjusted number of new vehicle registrations increased4.3% in July after declining 5.8% in May and 12.2% in June. July sales wereup 8.2% over the year.

We expect a 2.4% increase in Washington employment this year which is upfrom the 2.0% increase in the June forecast. We expect above-averagegrowth through the remainder of the forecast as the economy continues torecover from the recession. We expect employment growth to average 2.3%per year in 2022 through 2025 which is the same rate expected in the Juneforecast. Our forecast for nominal personal income growth this year is 6.4%,up from 6.0% in the June forecast. Personal income growth will slow nextyear as the extraordinary stimulus of the last two years is withdrawn. Weexpect personal income growth of only 1.7% in 2022 compared to 1.5% inthe June forecast. Our new forecast for nominal personal income growth in2023 through 2025 averages 5.3% per year compared to the 4.8% rate in theJune forecast.

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WASHINGTON STATEECONOMIC AND REVENUE FORECAST COUNCIL

Washington State Economic Outlook & Revenue Collection Experience

Presented toThe Economic & Revenue Forecast Council

Steve LerchExecutive Director

September 8, 2021

Economic ReviewSeptember 8, 2021

Slide 1 WASHINGTON STATE ECONOMIC AND REVENUE FORECAST COUNCIL

Summary

• Average U.S. GDP growth for 2021 – 2025 is verysimilar to the June forecast

• Inflation is expected to be higher in 2021 and 2022compared to the June forecast

• Annual WA personal income growth is expected toaverage 4.4% over 2021 – 2025 compared to 4.0%average growth in the June forecast

• The preliminary economic forecast does not assumepassage of proposed infrastructure or other stimuluslegislation

• Revenue collections since the June forecast are $90million (2.1%) above expectations



Forecast risks

Upside• The recent surge in COVID cases slows, leading to

greater consumer confidence and a return to moretypical spending patterns

• Supply chains recover more quickly thanexpected, leading to increased supply of goodsand services

Downside• Rising COVID cases lead to social distancing and

reduced consumer spending• Recent commodity price increases are not

transitory but lead to higher expected inflation

9



U.S. industrial capacity utilization is back to pre-pandemic level, below recent historical average

60

65

70

75

80

85

2000 2003 2006 2009 2012 2015 2018 2021

U.S. Industrial Capacity Utilization

Source: Federal Reserve; data through July 2021

Capacity utilization has never reached 100% and has only exceeded 90% during wartime; average for 1972 to 2000 = 79.6%



Rising COVID cases, higher inflation have reduced consumer confidence in last two months

0

25

50

75

100

125

150

2005 2007 2009 2011 2013 2015 2017 2019 2021

Index Mich: 1966Q1 = 100, SAConf Board: 1985 =100, SA

U. Michigan Conf Board

Sources: University of Michigan, Conference Board; data through August 2021

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The fraction of households indicating eviction or foreclosure in next two months is “very likely” has increased

0%

5%

10%

15%

20%

25%

30%

U.S. - mortgage WA - mortgage U.S. - renters WA - renters

% households expecting eviction or foreclosure in next two months

Oct. 28 - Nov. 9 2020 Apr. 28 - May 10 2021Jun. 23 - Jul. 5 2021

Source: U.S. Census Bureau Household Pulse Survey



The share of workers who have been unemployed for 27+ weeks peaked in April 2021

0102030405060708090

100

% Unemployed by Unemployment Duration

< 5 weeks 5 - 14 weeks 15 - 26 weeks 27+ weeks

Source: U.S. Bureau of Labor Statistics, data May 2020 – July 2021

11



The employment-population ratio has improved since April 2020 but remains below pre-pandemic levels

50

52

54

56

58

60

62

64

2010 2011 2012 2014 2015 2016 2018 2019 2020

Employed as percent of age 16+ population

WA U.S.

Compared to Jan. 2020, the July 2021 employment-population ratio is 2.5% lower in WA and 2.7% lower in the U.S.

Source: U.S. Bureau of Labor Statistics, data through July 2021



Nationally, employment remains below Jan. 2020 levels for workers with annual wages below $27,000

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

2020 2020 2020 2020 2020 2021 2021 2021

U.S. employment relative to Jan. 2020 by annual income

<$27,000 $27,000 - $60,000 >$60,000Source: tracktherecovery.org, Paychex, Intuit, Earnin, Kronos; daily data (7 day moving average) Feb. 1 2020 – June 27 2021

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WA employment remains below Jan. 2020 levels for workers with annual wages below $60,000

-50%

-40%

-30%

-20%

-10%

0%

10%

2020 2020 2020 2020 2020 2021 2021 2021

WA employment relative to Jan. 2020 by annual income

<$27,000 $27,000 - $60,000 >$60,000Source: tracktherecovery.org, Paychex, Intuit, Earnin, Kronos; daily data (7 day moving average) Feb. 1 2020 - June 27 2021



WA and U.S. residential construction has been volatile but trending up since July 2020

0

20

40

60

80

100

0

500

1,000

1,500

2,000

2,500

2001 2004 2007 2010 2013 2016 2019

Tho

usa

nd

s

Tho

usa

nd

s

Building Permits (thousands of units, SAAR)

U.S. WA

Source: U.S. Census Bureau; monthly data through July 2021

13



Home price growth climbed to a record in June

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2000 2003 2006 2009 2012 2015 2018 2021

Case-Shiller home price index, year over year % change, SA

Seattle U.S.Source: Case-Shiller, data through June 2021



Blue Chip GDP forecasts for 2021: June 2021 vs August 2021

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Jun-21 Aug. 2021

U.S. real GDP growth forecast

High Average Low

Source: Blue Chip Economic Indicators, June 2021 and August 2021

14



GDP levels similar to June forecast; growth slightly weaker in 2021, slightly higher in 2022 - 2025

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

$22,000

2007 2010 2013 2016 2019 2022 2025

Quarterly real GDP, 2012 $ billions

Sept. preliminary June

Source: IHS Markit, ERFC Sept. 2021 preliminary forecast; data through 2021 Q2

Forecast



Oil prices are very similar to June forecast

20

30

40

50

60

70

80

90

100

110

120

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Dol

lars

Per

Bar

rel


Source: Energy Information Administration, IHS Markit, ERFC; data through Q2 2021Note: Vertical black line indicates last actual

Forecast

15



Forecasters generally expect inflation to be lower after 2021

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

ERFC-Sept.prelim

Survey of ProfForecasters

Blue Chip IHS-Markit Economy.com

Consumer Price Index, annual % change

2021 2022 2023



U.S. nonfarm employment growth is stronger in 2021 and 2022, slightly weaker in 2023 - 2025

115

120

125

130

135

140

145

150

155

160

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Mill

ion

s

U.S. Nonfarm Payroll Employment


Forecast

Source: IHS Markit, ERFC Sept. 2021 preliminary forecast; data through 2021 Q2

16



WA personal income growth is expected to be higher through 2025 compared to June

300

350

400

450

500

550

600

650

700

2013 2015 2017 2019 2021 2023 2025

Bill

ion

s o

f U

SD

Washington personal income


Source: ERFC Sept. 2021 Preliminary forecast; historical data through 2020



WA employment is very similar to June

2,600

2,800

3,000

3,200

3,400

3,600

3,800

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Thou

san

ds

Washington Nonfarm Payroll Employment


Source: ERFC Sept. 2021 Preliminary forecast; historical data through 2020 Q2

Forecast

17



Washington housing permits forecast revised down slightly in 2021 - 2024 compared to June

20

25

30

35

40

45

50

55

60

2013 2015 2017 2019 2021 2023 2025

Tho

usa

nd

s

Washington Housing Permits


Source: ERFC Sept. 2021 Preliminary forecast; historical data through 2020



Revenue Act collections have decreased from recent peak; year over year growth exceeds 18% in the last two months

0.60.70.80.91.01.11.21.31.41.51.61.71.81.9

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

$billions SA

Revenue Act Collections 3-Month Moving Average

Source: DOR and ERFC; monthly data through June 2021 activity

* Adjusted for large one-time transactions, amnesty payments, reporting frequency change and deferred 2020 payments, current definition of Revenue Act

18



Taxable REET activity in July increased to the third highest total ever, driven by a surge in large commercial sales

0

2

4

6

8

10

12

14

1996 1999 2002 2005 2008 2011 2014 2017 2020

$Billions

Seasonally Adjusted Taxable Real Estate Excise Activity

Total Total excl. sales >$10M

Source: ERFC; Monthly data through July 2021 estimate

Large commercial transactions in July increased to $2.6 B, up from $847 M in June; excluding large sales, SA activity decreased slightly.



Revenue collections to date

Estimate Actual Difference Pct.

Dept. of Revenue $4,219,216 $4,305,198 $85,982 2.0%

All other agencies $6,004 $9,786 $3,782 63.0%

Total GF-S $4,225,220 $4,314,984 $89,764 2.1%

Collections Variance Since June Forecast (June 11, 2021 – August 10, 2021)

dollars in thousandsThe main contributor to the positive forecast variance was REET collections ($73 million).

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Conclusion

• U.S. GDP is similar to the June forecast.

• WA personal income is higher compared to theJune forecast.

• Rising COVID-19 cases and higher inflationcontinue to pose a risk to economic activity.

• The next monthly revenue collection report will beavailable on September 16th and the revenueforecast will be presented on September 24th.



Questions

Economic & Revenue Forecast CouncilPO BOX 40912Olympia WA 98504-0912

www.erfc.wa.gov360-534-1560

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U.S. Economic Forecast ComparisonAugust 2021

2021Q2 2021Q3 2021Q4 2022Q1 2020 2021 2022 2023 2024 2025

Real GDP, Percent Change, Annual Rate ERFC (September Preliminary) 6.5 7.6 5.7 3.8 -3.4 6.2 4.4 2.3 2.1 2.0 IHS 6.5 6.1 5.8 4.8 -3.4 6.1 4.4 2.2 2.4 2.3 Economy.com 6.5 8.2 6.4 4.5 -3.4 6.3 4.5 2.6 Blue Chip Average* 7.1 5.6 4.0 6.2 4.4 2.4 2.2 2.1 Blue Chip Top 10* 9.2 7.6 5.4 6.7 5.5 2.8 2.5 2.4 Blue Chip Bottom 10* 5.1 3.5 2.6 5.8 3.4 1.9 1.8 1.8

Real Consumption, Percent Change, Annual Rate ERFC (September Preliminary) 11.8 2.9 3.7 4.2 -3.8 8.1 4.1 2.5 2.1 2.2 IHS 11.8 1.9 4.3 2.6 -3.8 8.0 3.4 2.4 2.7 2.8 Economy.com 11.8 3.9 6.6 4.0 -3.8 8.4 4.3 2.2 Blue Chip Average* 4.7 4.3 3.6 8.1 4.1 2.4 2.3 2.3 Blue Chip Top 10* 8.2 6.7 5.0 8.8 5.2 2.9 2.7 2.6 Blue Chip Bottom 10* 1.4 2.4 2.3 7.1 3.1 2.0 2.0 2.0

Federal Funds Rate ERFC (September Preliminary) 0.1 0.1 0.1 0.1 0.4 0.1 0.1 0.2 0.5 1.0 IHS 0.1 0.1 0.1 0.1 0.4 0.1 0.1 0.2 0.5 1.0 Economy.com 0.1 0.1 0.1 0.1 0.4 0.1 0.1 0.5

Three Month T-Bill Rate ERFC (September Preliminary) 0.0 0.0 0.1 0.1 0.4 0.0 0.1 0.2 0.5 0.9 IHS 0.0 0.0 0.1 0.1 0.4 0.0 0.1 0.2 0.5 0.9 Blue Chip Average* 0.1 0.1 0.1 0.1 0.1 0.5 0.8 1.2 Blue Chip Top 10* 0.1 0.1 0.1 0.1 0.2 0.9 1.4 1.9 Blue Chip Bottom 10* 0.0 0.1 0.1 0.0 0.1 0.1 0.3 0.6

10-Yr. T-Note YieldERFC (September Preliminary) 1.6 1.4 1.5 1.6 0.9 1.4 1.8 2.1 2.3 2.6IHS 1.6 1.3 1.5 1.6 0.9 1.4 1.8 2.1 2.3 2.6Economy.com 1.6 1.4 1.7 2.0 0.9 1.5 2.2 2.8Blue Chip Average* 1.4 1.6 1.7 1.5 1.9 2.3 2.5 2.7Blue Chip Top 10* 1.7 1.9 2.0 1.7 2.2 2.8 3.1 3.3Blue Chip Bottom 10* 1.2 1.3 1.4 1.4 1.5 1.8 2.0 2.1

Consumer Price Index, Percent Change, Annual Rate ERFC (September Preliminary) 8.4 5.9 2.0 1.5 1.2 4.2 2.5 1.7 2.1 2.1 IHS 8.4 5.9 1.5 1.5 1.2 4.2 2.4 1.8 2.1 2.2 Economy.com 8.4 4.2 2.9 2.4 1.2 4.0 3.0 2.3 Blue Chip Average* 5.1 2.4 2.2 4.0 3.0 2.3 2.3 2.3 Blue Chip Top 10* 7.2 3.8 3.2 4.4 3.9 2.7 2.7 2.8 Blue Chip Bottom 10* 2.5 1.2 1.3 3.4 2.2 1.9 2.0 1.9

Payroll Employment, Millions ERFC (September Preliminary) 145.0 147.7 149.8 151.2 142.3 146.5 152.7 154.9 155.7 156.2

Percent Change, Annual Rate 4.8 7.7 5.7 3.8 -5.7 3.0 4.2 1.4 0.6 0.3 IHS 145.0 147.6 149.6 151.1 142.3 146.4 152.5 154.5 155.5 156.2

Percent Change, Annual Rate 4.8 7.2 5.5 4.1 -5.7 2.9 4.2 1.3 0.7 0.5 Economy.com 145.0 147.2 149.0 150.4 142.3 146.2 151.8 154.1

Percent Change, Annual Rate 4.8 6.1 5.0 3.9 -5.7 2.7 3.9 1.5

Unemployment Rate, Percent ERFC (September Preliminary) 5.9 5.1 4.6 4.2 8.1 5.4 3.8 3.4 3.5 3.8 IHS 5.9 5.1 4.7 4.3 8.1 5.5 3.9 3.6 3.6 3.8 Economy.com 5.9 5.3 4.6 4.0 8.1 5.5 3.7 3.5 Blue Chip Average* 5.4 4.9 4.7 5.6 4.4 4.2 4.0 4.0 Blue Chip Top 10* 5.8 5.4 5.2 5.8 4.9 4.8 4.5 4.4 Blue Chip Bottom 10* 5.1 4.5 4.1 5.4 3.8 3.7 3.6 3.6

Real Disposable Personal Income, Percent Change, Annual Rate ERFC (September Preliminary) -30.6 -6.3 -3.1 0.2 6.2 2.2 -2.5 2.7 2.7 2.8 IHS -30.6 -6.7 -2.9 0.3 6.2 2.1 -2.5 2.5 2.8 2.9 Blue Chip Average* -3.7 -0.3 1.7 3.3 -1.4 2.1 2.1 2.0 Blue Chip Top 10* 3.9 4.2 4.4 5.4 0.9 2.5 2.4 2.4 Blue Chip Bottom 10* -9.5 -5.1 -1.8 2.0 -3.1 1.8 1.7 1.7

West Texas Intermediate ERFC (September Preliminary) 66.1 69.5 68.0 66.8 39.2 65.4 64.9 60.6 57.3 55.2 IHS 66.1 70.2 65.2 63.9 39.2 64.8 62.8 62.1 62.3 62.8 Economy.com 66.2 69.8 65.9 63.4 39.5 65.0 61.0 60.3 CME Group (10/12/2016) #REF! #REF! #REF! #REF! #REF! #REF! #REF! 65.4

* Forecasts beyond 2022 are from the March 2021 Blue Chip Economic Indicators

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U.S. Forecast Comparison

2021Q2 2021Q3 2021Q4 2022Q1 2019 2020 2021 2022 2023 2024 2025

Real GDP (Billions of 2012 Dollars)

September Forecast, Preliminary 19,358 19,716 19,992 20,178 19,033 18,385 19,530 20,396 20,872 21,308 21,735

Percent Change 6.5% 7.6% 5.7% 3.8% 2.3% -3.4% 6.2% 4.4% 2.3% 2.1% 2.0%

June Forecast 19,532 19,878 20,128 20,316 19,092 18,426 19,656 20,524 20,982 21,397 21,808

Percent Change 9.6% 7.3% 5.1% 3.8% 2.2% -3.5% 6.7% 4.4% 2.2% 2.0% 1.9%

Real Consumption (Billions of 2012 Dollars)


Percent Change 11.8% 2.9% 3.7% 4.2% 2.2% -3.8% 8.1% 4.1% 2.5% 2.1% 2.2%

June Forecast 13,658 13,862 14,019 14,157 13,240 12,726 13,723 14,312 14,643 14,937 15,247

Percent Change 9.5% 6.1% 4.6% 4.0% 2.4% -3.9% 7.8% 4.3% 2.3% 2.0% 2.1%

PCE Price Index (2012=100)

September Forecast, Preliminary 114.8 116.0 116.6 117.1 109.9 111.2 115.1 117.7 119.7 122.1 124.6

Percent Change 6.4% 4.5% 2.1% 1.6% 1.5% 1.2% 3.5% 2.3% 1.7% 2.0% 2.0%

June Forecast 114.3 115.0 115.5 116.1 109.9 111.1 114.4 116.9 119.1 121.4 123.7

Percent Change 5.3% 2.3% 1.9% 1.9% 1.5% 1.2% 2.9% 2.2% 1.9% 1.9% 1.9%

Real Personal Income (Billions of 2012 Dollars)


Percent Change -26.7% -4.7% -1.9% 0.8% 2.5% 5.3% 2.8% -1.5% 2.8% 2.7% 2.7%

June Forecast 18,246 17,861 17,710 17,874 16,888 17,751 18,347 18,041 18,440 18,906 19,387

Percent Change -24.5% -8.2% -3.3% 3.7% 2.4% 5.1% 3.4% -1.7% 2.2% 2.5% 2.5%

Nonfarm Payroll Employment (Millions)


Percent Change 4.8% 7.7% 5.7% 3.8% 1.3% -5.7% 3.0% 4.2% 1.4% 0.6% 0.3%

June Forecast 145.0 147.6 148.6 149.6 150.9 142.3 146.2 150.9 153.3 154.8 155.8

Percent Change 4.8% 7.3% 2.8% 2.7% 1.3% -5.7% 2.7% 3.2% 1.6% 1.0% 0.6%

Unemployment Rate (Percent of Labor Force)


June Forecast 5.7 5.1 4.8 4.5 3.7 8.1 5.4 4.1 3.6 3.5 3.7

Oil Price, Refiner's Acquisition


June Forecast 65.1 70.5 68.6 66.9 59.4 39.2 65.4 64.9 60.7 58.0 56.4

30 Year Fixed Mortgage Rate (Percent, average)


June Forecast 3.0 3.1 3.2 3.4 3.9 3.1 3.0 3.5 3.7 3.9 4.1

3 Month T-Bill Rate (Percent, average)


June Forecast 0.0 0.0 (0.0) (0.0) 2.1 0.4 0.0 0.0 0.1 0.2 0.5

23

Washington Forecast Comparison

2021Q2 2021Q3 2021Q4 2022Q1 2019 2020 2021 2022 2023 2024 2025

Real Personal Income (Billions of 2012 Dollars)


Percent Change -22.6% -2.9% -2.5% 1.3% 3.8% 5.4% 2.9% -0.6% 3.5% 3.2% 3.2%

June Forecast 485.6 478.2 473.7 479.0 448.9 473.1 487.4 484.4 497.1 512.0 527.4

Percent Change -19.1% -5.9% -3.8% 4.5% 3.8% 5.4% 3.0% -0.6% 2.6% 3.0% 3.0%

Personal Income (Billions of Dollars)


Percent Change -17.6% 1.6% -0.5% 3.0% 5.4% 6.7% 6.4% 1.7% 5.2% 5.2% 5.3%

June Forecast 555.3 549.9 547.2 555.9 493.1 525.8 557.5 566.2 592.3 621.6 652.3

Percent Change -14.7% -3.8% -2.0% 6.5% 5.4% 6.6% 6.0% 1.5% 4.6% 4.9% 4.9%

Disposable Personal Income (Billions of Dollars)


Percent Change -21.2% 0.1% -1.3% 2.3% 5.1% 7.1% 5.9% 0.8% 5.1% 5.3% 5.5%

June Forecast 499.4 492.9 490.2 498.5 442.2 473.6 501.8 508.1 531.1 556.1 583.1

Percent Change -17.9% -5.2% -2.1% 6.9% 5.1% 7.1% 6.0% 1.3% 4.5% 4.7% 4.9%

Nonfarm Payroll Employment (Thousands)

September Forecast, Preliminary 3333 3395 3441 3471 3469 3286 3364 3513 3593 3638 3678

Percent Change 5.5% 7.6% 5.5% 3.6% 2.0% -5.2% 2.4% 4.4% 2.3% 1.3% 1.1%

June Forecast 3319 3385 3419 3459 3469 3286 3351 3500 3573 3628 3669

Percent Change 4.5% 8.2% 4.1% 4.8% 2.0% -5.3% 2.0% 4.4% 2.1% 1.6% 1.1%

Unemployment Rate (Percent of Labor Force)


June Forecast 5.3 5.0 4.8 4.6 4.2 8.4 5.2 4.3 4.1 4.1 4.3

Manufacturing Employment (Thousands)


Percent Change -3.0% 1.6% 0.2% -1.8% 2.1% -7.5% -4.9% 1.0% 2.6% 0.7% 0.4%

June Forecast 258.6 258.5 255.4 257.8 293.7 271.7 258.4 259.5 263.3 267.2 268.4

Percent Change -3.9% -0.1% -4.6% 3.7% 2.1% -7.5% -4.9% 0.4% 1.5% 1.5% 0.5%

Construction Employment (Thousands)


Percent Change 0.8% 3.2% -5.0% -4.7% 3.0% -2.7% 4.3% -2.4% -0.9% 1.6% 2.5%

June Forecast 222.5 220.3 217.7 215.8 219.5 213.5 220.8 213.4 209.1 210.4 211.8

Percent Change 0.0% -3.8% -4.7% -3.5% 3.0% -2.7% 3.4% -3.4% -2.0% 0.6% 0.7%

Housing Permits (Thousands)


Percent Change -68.8% 58.8% -24.0% -13.5% 1.4% -9.0% 21.8% -14.1% -4.7% 1.9% 0.4%

June Forecast 52.1 51.9 49.2 47.6 48.4 44.1 54.2 46.3 44.9 45.6 44.4

Percent Change -55.1% -1.7% -19.0% -13.1% 1.4% -9.0% 23.1% -14.7% -3.0% 1.7% -2.8%

24

U.S. Forecast Comparison Fiscal Years

2020 2021 2022 2023 2024 2025

Real GDP

Billions of 2012 dollars

September Preliminary Forecast 18,631 18,936 20,056 20,647 21,094 21,521

Growth -0.9% 1.6% 5.9% 2.9% 2.2% 2.0%

June Forecast 18,677 19,003 20,197 20,766 21,193 21,602

Growth -1.1% 1.7% 6.3% 2.8% 2.1% 1.9%

Difference in level -46 -67 -141 -119 -99 -81

Difference in growth forecast 0.2% -0.1% -0.4% 0.1% 0.1% 0.1%

Real Consumption


September Preliminary Forecast 12,803 13,173 13,958 14,391 14,710 15,025

Growth -1.4% 2.9% 6.0% 3.1% 2.2% 2.1%

June Forecast 12,908 13,233 14,077 14,489 14,790 15,091

Growth -1.3% 2.5% 6.4% 2.9% 2.1% 2.0%

Difference in level -105 -61 -118 -98 -81 -66

Difference in growth forecast 0.0% 0.4% -0.4% 0.2% 0.1% 0.1%

PCE Price Index

2012 = 100

September Preliminary Forecast 110.6 112.8 116.8 118.7 120.9 123.4

Growth 1.3% 2.0% 3.6% 1.6% 1.9% 2.0%

June Forecast 110.5 112.6 115.8 118.0 120.3 122.5

Growth 1.3% 1.9% 2.8% 1.9% 1.9% 1.9%

Difference in level 0.1 0.2 1.0 0.6 0.6 0.8

Difference in growth forecast 0.0% 0.1% 0.7% -0.3% 0.0% 0.2%

Unemployment Rate

Percent of Labor Force

September Preliminary Forecast 6.0% 6.9% 4.4% 3.5% 3.4% 3.7%

June Forecast 6.0% 6.9% 4.6% 3.7% 3.5% 3.6%

Difference in forecast 0.0% 0.1% -0.2% -0.2% -0.1% 0.0%

30 Year Fixed Mortgage Rate

Annual Average


June Forecast 3.5% 2.9% 3.3% 3.6% 3.7% 4.0%

Difference in forecast 0.0% 0.0% -0.2% 0.0% 0.1% 0.1%

3 Month T-Bill Rate

Annual Average


June Forecast 1.2% 0.1% 0.0% 0.1% 0.1% 0.3%

Difference in forecast 0.0% 0.0% 0.1% 0.0% 0.2% 0.4%

25

Washington Forecast Comparison Fiscal Years

2020 2021 2022 2023 2024 2025

Real Personal Income



Growth 4.8% 4.7% -1.4% 3.1% 3.2% 3.2%

June Forecast 462.9 485.3 478.4 490.7 504.5 519.6

Growth 4.8% 4.8% -1.4% 2.6% 2.8% 3.0%

Difference in level -0.2 -1.0 -1.0 1.7 3.6 4.7

Difference in growth forecast 0.0% -0.2% 0.0% 0.6% 0.4% 0.2%

Nominal Personal Income

Billions of dollars


Growth 6.2% 6.8% 2.1% 4.8% 5.2% 5.3%

June Forecast 511.4 546.5 554.0 579.1 606.8 636.7

Growth 6.2% 6.9% 1.4% 4.5% 4.8% 4.9%

Difference in level 0.1 -0.3 3.7 5.2 7.6 10.1

Difference in growth forecast 0.0% -0.1% 0.7% 0.2% 0.4% 0.4%

Nonfarm Payroll Employment

Thousands

September Preliminary Forecast 3,403.3 3,282.7 3,452.0 3,561.3 3,616.1 3,658.5

Growth -0.9% -3.5% 5.2% 3.2% 1.5% 1.2%

June Forecast 3,403.3 3,277.0 3,437.7 3,542.3 3,601.7 3,649.8

Growth -0.9% -3.7% 4.9% 3.0% 1.7% 1.3%

Difference in level 0.0 5.7 14.2 19.0 14.3 8.7

Difference in growth forecast 0.0% 0.2% 0.3% 0.1% -0.1% -0.2%

Housing Permits

Units Authorized, Thousands


Growth 3.3% 4.3% -0.4% -9.7% -1.0% 2.0%

June Forecast 47.5 50.7 48.8 45.2 45.2 45.2

Growth 3.3% 6.7% -3.8% -7.3% 0.0% -0.2%

Difference in level 0.0 -1.1 0.6 -0.7 -1.1 -0.2

Difference in growth forecast 0.0% -2.4% 3.3% -2.4% -1.1% 2.1%

26

U.S.(000) % Chg. % Chg.

Total 161.3 5.0% 5.3%Leisure and Hospitality 41.0 16.9% 18.7%Electronic Shopping and Mail-Order Houses 10.4 13.8% 8.6%Information Excluding Software 6.9 9.7% 5.6%Other Services 9.3 8.1% 7.4%Wholesale Trade 10.1 8.0% 3.3%Professional and Business Services 28.5 6.9% 6.1%Construction 13.1 6.2% 3.1%Mining and Logging 0.3 5.2% 7.6%Education and Health Services 22.8 4.7% 3.2%Financial Activities 5.5 3.5% 2.1%Software Publishers 2.1 2.8% 7.6%Manufacturing Excluding Aerospace 3.7 2.0% 3.1%State and Local Gov Non-Education 2.0 0.9% 1.2%State and Local Gov Education 1.5 0.6% 4.1%Transportation, Warehousing and Utilities -1.0 -0.9% 6.8%Aerospace Product and Parts Manufacturing -12.5 -15.8% -2.8%

Information 9.0 6.2% 6.0%Retail Trade 25.7 6.7% 4.1%Manufacturing -8.8 -3.3% 2.9%

Source: WA State ERFC Kalman filtered data, U.S. Bureau of Labor Statistics

Year-Over-Year Employment Growth by Industry(July 2020 to July 2021)

Washington vs. U.S.Washington

27

Documents

Economic Review - erfc.wa.gov