Cheery news always sticks to the top of the Business page, while grimmer news seems to slip into the fold. Housing slows and its, "Home buyers don't have to pull the trigger as fast." An uptick in the jobless rate, "No problem... There is really no negative to put on this." (TNT) I'm here to put the negative on it. And the second Tuesday is now prediction Tuesday for state and local economic numbers.
While the overall economy in Washington will fare better than that of the rest of the country, as we enter the second dip of the Bush recession, state and local revenues will suffer, housing will suffer, and employment will suffer.
Home sales in most of the state have reached their peak. King County's will top out pretty soon. By this time next year (end of February reports), home prices will be down 5 to 10 percent in King County and 10-20 percent elsewhere in the state. Here are our benchmarks.
Actual February 2006 median home sale prices
King County - $345,000
Pierce County - $250,000
17-County Area * - $283,000
(*covered by Multiple Listing Service)
Predicted February 2007 median home sale prices
King County - $325,000
Pierce County - $220,000
17-County Area - $250,000
Picking the peak of a trend is the most difficult. Things tend to trend over long time periods. Can't find anybody else making predictions about housing. If you see some, drop us a line.
Employment growth will be nonexistent in Washington over the coming year. That is, zero job growth. I am not going to predict the unemployment rate, because it's been boogered by the Bush team and I haven't got a handle on it.
Background from economist John Williams:
"Richard Nixon had a highly publicized war with the Bureau of Labor Statistics on the unemployment data. Nixon wanted to report the unemployment rate as the lower of the seasonally adjusted or unadjusted number, at any given time, but not specify same to the public. While that approach was unconscionable at the time and never used, basically the same methodology was introduced in 2004 as "state-of-the-art" by the current Bush administration."
I just played with some employment growth v. employment rate figures from the 2006 Economic Report of the President. Clinton added 18.4 million jobs in his eight years. The unemployment rate dropped from 6.9 to 4.0. Bush added a total of 4.8 million jobs in five years, and the unemployment rate rose only to 5.1. Supposedly its down to 4.7 now. Something is very funky. I'll give you a chart next week.
Tax revenue growth has been set at 5% by OFM's chief forecaster Irv Lefberg. I've tried to budge him, but he's sticking to it. (Actually official baseline growth is only 2.2% next year, but it jumps to 5.7 in 2008 and continues at about 5 percent thereafter.) Barring legislative action, revenue will grow substantially slower -- 1.1% short term and 3.0% long term.