Washington State’s Economic Revenue Forecast Council recently released their September Economic and Revenue Forecast. In June, the Council had forecasted a state revenue shortfall of nearly $8.8 billion through FY 2023. The September update reduced that shortfall by a little more than half to about $4.25 billion. The news isn’t as bad as it was in June, but things are still uncertain.

Forecasted revenue shortfall for 2019-2021 is $2.3 billion and for 2021-2023 it is $1.95 billion.

While Washington’s revenue collections have been approximately $320 million above the June forecast (total collections are now roughly $960 million higher than forecasted), the economy is still vulnerable to economic uncertainty caused by an increase in COVID-19 cases.

The September report includes two new months of Washington employment data since the June quarterly forecast was released and indicates the state’s economy has recovered at least half of all jobs lost during the months of March and April (currently 8.5% unemployment rate, down from the historic 16.3% unemployment rate in April).

The disruption of airline travel is expected to reduce demand for new aircraft for some time. Another quarter of decline in aerospace exports will have a significant impact on overall exports. The recent announcement about Boeing creates additional uncertainty.

Washington housing construction declined in the second quarter but is above the June forecast. Seattle home prices declined for a third consecutive month, after 11 consecutive months of increases. Car and truck sales declined after three consecutive months of strong growth.

The forecast will likely continue to be impacted by COVID-19 infection rates, as a decline in infection rates could lead to quicker reopening of businesses and greater consumer confidence, while an increase in COVID-19 infection rates would likely reduce consumer spending and employment and slow the pace of economic reopening. The absence of additional supplemental unemployment funds and expiration of other federal s could also jeopardize the recent economic growth.