Based on his examination of past recessions, the state's chief economist said Wednesday that he expects the economic recession to end in August or September, and the economy to "gain traction" by the middle of next year.
Dr. Arun Raha said that prediction is based on the fact that the S&P 500 index has typically turned up two quarters prior to the trough of a recession. Assuming that one believes the bear market ended March 9 - and that stocks aren't experiencing a bear market rally - that puts the bottoming out of the current recession into the third quarter.
Raha's statement came during the second day of the AWB Spring Board Meeting in Spokane.
Many indicators point to a bottoming out of the recession. Credit has eased, but is not yet back to normal, Raha said. At the national level, the decline of housing starts has leveled off, though it is still far from its peak. In Washington, single-family home starts have stabilized.
"Things aren't getting any worse," Raha said.
Likewise, the rate of job loss is leveling off.
"The good news is things are still getting worse, but at a slower rate," he said, drawing some laughter.
Washington entered the current recession about a year after the rest of the nation, which is typical of previous recessions. Unlike past recessions, Raha said he expects the state to emerge from the recession at the same time as the rest of the country, rather than lagging behind.
He cautioned that the recovery, whenever it comes, is going to be long and drawn out.
Economic recovery depends in large part on consumer confidence, something that Raha does not doubt will rebound.
"You can always rely on the American consumer," he said. America is a fundamentally optimistic society built by immigrants who demonstrated their willingness to take risks.
"It is in our DNA," he said. "We like to go out there and do well and spend. Give us a little time to lick our wounds and recover. We'll be back."