The Great Recession of 2007-2009 is almost certainly over, both in Washington state and and the nation, Dr. Arun Raha, Washington's chief economist said Thursday.
But the recovery will be slow, and there remains a risk of a "double-dip" recession if consumer confidence does not improve, Raha said.
"At some point, private spending is what drives the economy," Raha said during a meeting of the state Economic & Revenue Forecast Council. "Public spending can't drive it forever."
He drew laughs by suggesting that people with stable jobs and no debt should consider spending 2 percent more this holiday season.
The latest forecast predicts state revenue will fall $238 million, a decline that Raha characterized as "relatively modest."
The forecast details include many positive signs, mixed with an almost equal measure of bad.
Credit conditions continue to ease, but there is a chance of a secondary round of credit contraction.
The decline in second quarter gross domestic product was smaller than expected, and the third quarter is on track to show positive growth. Automotive sales, helped by the federal government's "Cash for Clunkers" program improved sharply in August, and corporate profits are up. Consumer spending, however, is still "bumping along the bottom."
Unemployment, while still rising, is declining at a slower rate. During the last five months, Washington has lost jobs at a 1.4 percent annual rate compared to 6.5 percent during the six months prior to that. But the state will continue to lose jobs through the end of the year, and the manufacturing and construction sectors will continue to lose jobs into 2010.
Some bright spots: Washington's economy is once again expected outperform the national economy in the recovery, due in part to the large amount of trade and the improvement in the global economy.
Also, Boeing and Microsoft are both relatively healthy, the forecast states. The recovery in East Asia and Western Europe will help Boeing, and the launch of Windows 7 next month is expected to a positive for Microsoft.
The press release from today's meeting is available here.
The full revenue review notebook, including an executive summary and forecast details, is available here.
The full broadcast of the meeting from TVW is below.
