In Our View: Still Only a Snail's Pace
New state economic forecast shows no signs of accelerated recovery
Thursday, June 21, 2012
Back in the bad ol' days (frighteningly recent), "no news" was considered good as Washington state wrestled with the worsening economic crisis. But these days, as Washingtonians look for green shoots of a recovery to grow, "no news" actually is bad. Some will rejoice that Wednesday's revenue forecast by the state was essentially unchanged and basically flat. As a result of that report, legislators likely will not have to report for a special session, unless the trend worsens later in the year. The state has enough money in reserves to handle deviations.
But the real truth is, the recovery in our state should be far ahead of where it is now. State Rep. Ed Orcutt, R-Kalama, said on Wednesday that he remains "extremely concerned." That's one political perspective from a member of the Legislature's minority party, but it's shared by an independent, neutral expert. State economist Steve Lerch reminds Washingtonians that the state — and the nation, for that matter — are approaching a "fiscal cliff" later this year. Tax cuts will expire and numerous federal programs will enact required reductions.
Some of the solutions are beyond the state's control. Legislators in Olympia can't fix Greece or Spain or snap their fingers and create harmony in Congress. But Orcutt has a few suggestions that make sense at the state level. One is "regulatory and fiscal certainty" for employers, who need to know that profits can be reinvested in new jobs instead of higher taxes or paying for costly regulations. Also, Orcutt said, "consumers need protection against the further erosion of their limited disposable income."
Coincidentally on Wednesday, the Federal Reserve lowered its outlook for economic growth, which is projected at 2.4 percent, down from the 2.9 percent forecast in April. Much of the blame for that belongs to a conflicted Congress. The longer it procrastinates on reducing the deficit, fixing health care and resolving tax differences, the longer the too-slow recovery will last. Of course, few rational observers expect that kind of progress in Congress.
Gov. Chris Gregoire said the state's economy is "slowly recovering, but is not yet stabilized. Our priority has been and will continue to be to put people to work and get the economy on its feet." In many ways, optimism is warranted. The real estate crisis is subsiding more quickly than many observers anticipated. Consumer demand is pent-up and appears on the brink of leaping forward.
And at the risk of ruining your day, remember this: Not long ago, state economic forecasts carried a devastating string of downward revisions amounting to hundreds of millions of dollars. Wednesday, that downward revision was "only" $16 million, relatively stable.
After the fall election, when legislators report to Olympia in January, they must not use any "no news" or good news as an excuse to lessen the focus on helping businesses grow, create jobs, hire people, lower the unemployment rate and slap some serious giddyup on this recovery.
Sometimes you get the feeling state and federal politicians are driving with the emergency brake on … wondering why the mileage is so low.