State's chief economist: State coping better than rest of U.S.
But it’s still hurting, expert tells construction, real estate leaders
Wednesday, October 19, 2011
State economist Arun Raha relied on humor to soften the bad news while delivering an economic forecast to leaders of the local construction and real estate industry on Wednesday.
National and local economies are “stalling out” with weak demand, low growth levels and slow jobs recovery, Raha said.
But he was encouraged by strong showings in Washington’s aerospace and tech sectors, led by Boeing Co. and Microsoft, along with the state’s healthy export market, primarily agricultural products. Those factors have helped the state’s economy hold up when compared with the rest of the U.S.
“Our economy sucks,” Raha said. “But Washington state’s economy sucks less.”
About 135 attendees responded with occasional bursts of laughter while Raha spoke in the Columbia Room at the new Vancouver Community Library downtown. The event was hosted by the Southwest Washington Contractors Association, the Clark County Association of Realtors and Cascade Title Co.
“We’re just trying to get as much information as we can to help our members predict the type of work they can expect in the future,” said Mike Bomar, executive director of the 232-member contractors association.
Raha said residential foreclosures, falling property values and slowing real estate and construction sales are still dragging on the economy.
He encouraged business owners to rethink their business plans, to embrace today’s L-shaped recovery, in which sales figures are flattening out after a steep drop.
“Sideways is the new up,” said Raha, appointed in 2008 as the executive director of the Washington Economic and Revenue Forecast Council and the state’s chief economist.
He called the real estate industry’s recovery key to national and state recovery, and pointed out that a number of multi-family apartment projects are proposed across the state, an early sign of the housing sector’s recovery.
“All these people who aren’t buying houses have to live somewhere,” Raha said. “These are little signs of hope.”
But Raha said the state’s economic situation won’t improve as long as consumers, business owners and investors remain fearful. He said our fears are fueled by the European debt situation, weak consumer demand, high jobless rates and politicians who are gridlocked over policies in Washington, D.C.
“Consumer confidence is in the tank and has been declining,” despite the recession’s official end in June 2009, Raha said. “For consumers, it was never over.”
He hopes the economy won’t slip into another recession, but Raha hinted that could happen if European countries, starting with Greece, default on their debts.
United States banks are exposed to between $663 billion and $1.3 trillion in debt owed by the nations of Europe, Raha said. “You don’t know how far the ripple effect is going to spread.”
Recovery could take another 12 to 18 months, according to Raha, who jokingly invited his audience to get out and shop for items that generate sales tax revenue and could help plug the $1.4 billion hole in the state budget he oversees.
“Just to get the economy going, go shopping this weekend,” he said.
Raha predicted businesses across the state could see an economic recovery by mid-2012 or 2013.