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Washington to other states: 'We suck less than you do.'

Hard numbers reveal a confusing economy that's exporting more, hiring less, and still quavering before Europe's debt and America's political gridlock.

State economist Arun Raha breaks the bad news.

State economist Arun Raha breaks the bad news. Wikimedia Commons

Gross domestic product has recovered, but employment remains weak.

Gross domestic product has recovered, but employment remains weak. Economic Revenue and Forecast Council

Good thing we'll have some of these to sell.

Good thing we'll have some of these to sell. Boeing Company

Last week Arun Raha, the state’s chief economist, provided some of the hardest numbers yet about Washington's economy, at the 17th annual Washington State Economic Symposium in Olympia. The picture that emerged was grim. For jobs, the state's financial condition, and the economy in general, recovery is still years away.

Consider this: After hearing his economic forecast, I asked Raha about the growing sense that the Great Recession was such a steep decline that it will take a decade for the economy to fully recover. He agreed that it was probably true “and we may only be about half way through it unless someone does something right.” In the current national budget morass, nobody seems to be doing much right, the latest example being the failure of the super committee to reach agreement. That means it could be 2017 before the recession's effects are behind us.

Reports presented at the conference paint a persuasive picture of higher-than-average state unemployment rates for several more years. While jobs are being created, the pace of job growth remains slow; only 1.500 were added in the past six months. If the Occupy movement focuses on disparities in the economy and lack opportunity, it will be around for some time to come.

Several views of the economy reflect the dismal picture of the years ahead. Raha said, for example, that gross domestic product, the sum of goods and services in the national economy, had recovered to its pre-recession 2007 level, about $14 trillion. But the nation has 6.8 million fewer jobs. How can that be?

The answer is productivity and technology. The people who have jobs are working harder than ever, often for lower wages, Technology helps businesses make do more with fewer people. Boeing is a good example: It's producing more airplanes with fewer people.

Raha noted that 45 months after the recession started, Washington's employment is still down to the tune of 134,000 jobs, 5.4 percent of the labor force. At the state's current rate of job creation, it will take more than four years to get back to where employment was at the start of the recession.

Even economists find some of the data confusing. For example, last week's labor market report showed that the state added 4,600 jobs in October, thanks to an increase of 4,900 jobs in government. (The private sector lost jobs.) But state and local governments are all in crisis over declining revenues and, as a result, are cutting budgets; shouldn't that mean they're cutting jobs? “We were really surprised by the number,” said Dave Wallace, an economist at the state Employment Security Department.

The employment report did include some marginally good news. The unemployment rate dropped from 9.2 percent to 9 percent - but that rate has been stuck at about 9 percent for several years now. The Employment Security Department revised its report for September to show that only 10,700 jobs were lost then, rather than the 18,400 originally reported. An estimated 314,698 people were still unemployed and looking for work in October, and 176,390 of them received $255 million in unemployment benefits; nearly 140,000 were no longer receiving unemployment benefits. As of Nov. 5, another 64,550 had run out of benefits.

Raha said the biggest threat to the U.S. economy remains the debt crisis in Europe. He explained that American banks are not immune to the situation there, noting that their exposure to European debt is about $1.4 trillion. “What happens in Europe does not stay in Europe,” he said: A European banking crisis would become a U.S. banking crisis, and tip the economy into another recession. “My guess, my forecast, is that Europe will do what it takes to avoid a banking crisis,” Raha said hopefully.

Another risk to the recovery is the political gridlock in Washington, D.C, which has led to a steady erosion of both consumer and business confidence. The lack of action in the super committee could affect the state, Raha said, because of the big cuts in defense spending if the across-the-board automatic cuts are triggered. This state has a number of military bases that could be affected.


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Comments:

Posted Wed, Nov 23, 9:57 a.m. Inappropriate

Raha has been wrong nearly 100% of the time. He continually underestimates expenses and overstates revenue. The press FAILS to report on that.

We are entering a global recession. It will get worse and progressives continue to block spending cuts, and resource extraction. The result is shifting jobs to China and elsewhere.

Posted Wed, Nov 23, 10:11 a.m. Inappropriate

All these monthly numbers and quarterly numbers get announced; then they are 'adjusted' up or down...the percentages all seem meaningless. The increase of 4900 government jobs is very disturbing. Could they all be new parking enforcement officers in Seattle moved around and clinging to their retirement and benefits revenue streams? Quite frankly, government employment, featherbedding, and bogus small business employees on family and small business payrolls all skewer the real number of total productive employees. Further shedding of bogus, scam, sham, and fraudulent 'no-show' jobs is hopefully in the future.

animalal

Posted Wed, Nov 23, 12:51 p.m. Inappropriate

"My guess, my forecast, is that Europe will do what it takes to avoid a banking crisis,”

Good luck with that! The EU replaced the prime minister in Greece, and Italy without holding elections and still the debt in those countries is causing bond rates to rise.

http://youtu.be/2gm9q8uabTs

http://market-ticker.org/akcs-www?post=198023

The end result is that the EU is done for. You can't have a currency without the ability to tax. You can't, for long, spend more than you make, governments included.

GaryP

Posted Wed, Nov 23, 1:45 p.m. Inappropriate

At least the state forecast is more cheerful than the comments from the peanut gallery. All future projections are by definition speculative, but you have to do the best you can with what you have. Speaking of all that, isn't it about time for another End of the World prophecy? We haven't had one for a couple of weeks. Rumor has it that Jesus was due to land in Houston last week but was held up at the Mexican border. Some stoned-out angel forgot to tell him he needed a visa. So even with a good lawyer I'm afraid we're looking at another 6 to 8 month delay.

woofer

Posted Thu, Nov 24, 8:24 a.m. Inappropriate

"My guess, my forecast, is that Europe will do what it takes to avoid a banking crisis,”

Wasn't that Corzines risk assessment when he looted the future's accounts of MF Globals customers and doubled-down on Junk Bond's?

While budget forecasts are "by definition speculative," if one assumes the Economy is backstopped--somebody is going to bail it out, as John Corezine did--then a speculative forecast becomes mere confirmation bias. Someone more apt to "speculate" that the economy will continue to deteriorate would forecast differently. The State, accepting massaged economic data, has yet to come to terms with the fact that inflation is out pacing economic activity--a dynamic alone that skews budget projections. Jesus, The Prince of Peace, threw the money-changers out of the Temple the one time he loss it. Define away the issue; that's masturbation at best.

Posted Fri, Nov 25, 10:58 a.m. Inappropriate

If the state truly wanted to suck less, they could get out of BOA, and start their own bank. That way they could loan money to municipalities instead of forcing them to go to the bond market to borrow money. And they could borrow from the Fed like every other bank does at near zero percent interest to cover those loans, pledging tax revenues as assets. If bond holders and banks can do this, surly a state run bank could as well.

In addition it could issue those welfare debit cards at cost instead of paying 3% to the bank.

GaryP

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