A snapshot as Washington edges over an economic cliff
Washington state’s first economic update since the coronavirus crisis shows a slide in our economic fortunes that is singular for its “depth and speed.”
The update is published by Washington State’s Economic and Revenue Forecast Council. The document does not provide a forecast of what’s to come. But it provides our first snapshot of the economic cliff caused by this pandemic.
Car and Truck Sales
Never in the history of state records – which date to July 1970 – have car and truck sales been this low. New vehicle registrations in Washington state fell 63.5% from March to April and 68.9% over the year.
Before the coronavirus shutdown, construction in the state was running at full-steam - exceeding forecasts. Now construction employment is down now by 47,200 jobs.
Already suffering because of Boeing's Max crisis, aerospace has lost 8,300 jobs. Manufacturing as a whole has lost 27,700 jobs.
Washington state’s exports have been in decline now for a year and a half. The main reason is the prolonged grounding of Boeing’s 737 MAX, which caused state exports of transportation equipment to dive 59.2% over the year and filled runways around the state with unsold planes. Since coronavirus interrupted trade worldwide, however, agriculture has added its woes to the heap. Food exports decreased 21.3% over the year. Exports of other goods fell 5.7%. In all, exports fell 35.1% year-over-year in the first quarter of 2020.
In a separate statement the Ports of Seattle and Tacoma said that in the first four months of this year they experienced a total of 39 void sailings - in which ships expected to arrive bearing goods and leave carrying goods simply failed to show up. The ports blamed the US-China trade dispute as well as a shuddering supply chain caused by coronavirus shutdowns. Total container cargo volumes are down 17.5% to date.
This has the feel of a keepsake photograph: In February, Seattle home prices were up 100% since the lowest point following the Great Recession in December 2011. In February, Seattle home prices were 39% higher than the previous peak in May 2007.
In February, Seattle-area home prices were up over the previous year for the seventh consecutive month, following a pricing correction that occurred in the three months directly before. The economic council provided no insight about current real estate trends.
Much of this is bad news for the state, which is watching as some of the key ways it gets paid suffer gut punches. Construction purchasing triggers sales tax receipts. Car sales are the gift that keeps on giving, triggering taxes, fees and often a continuing addiction to fuel, which also triggers tax payments.
From April 11 to May 10, General Fund-State came in at $434.6 million, which is 22.5% lower than the February forecast. However, about half of this was caused by the state’s own decision to allow taxpayers to defer payments. Those payments, which should bring in about $200 million are due by the end of June.