SEATTLE, WA – Washington state’s economic forecast remains relatively unchanged since the June forecast, when it was revealed that the state may run out of money by 2027 despite an historic tax increase in the 2025 legislative session.
“I would say the forecast for September is very similar to what we had for June,” Executive Director and Chief Economist for the Economic and Revenue Forecast Council Dave Reich told ERFC members at its Tuesday meeting. “Most of the assumptions we made in the model in June either have proven to kind of been born out or are still look good to us. Both the U.S. and Washington economies have been transitioning to this kind of slower growth period.”
However, Reich warned that there was “a significant amount of uncertainty around the forecast” due to factors such as U.S. tariffs and retaliatory tariffs, along with potential federal interest rate changes. Additionally, further escalation in the Russian-Ukraine War or Middle Eastern conflicts could cause energy prices to increase.
Although job openings and hiring have returned to pre-pandemic lockdown levels, the economic forecast anticipates a 0.3% increase in state employment this year, which is down from the 0.5% in the June forecast. Meanwhile, the unemployment rate is anticipated to increase from 4.5% in 2025 to 4.9% in 2026 and 2027.
Reich noted that Microsoft recently laid of 3,200 employees, while other tech companies such as Google and Meta have also reduced their workforce, saying the employment rate “hasn’t really been going up or going down too much. Some growth [is] probably offsetting the new layoffs, but certainly … that sector has been a real source of employment growth for us for years.”
The General Fund-State account, which is the primary account for funding the state operating budget, had revenue levels increased by $128.3 million or 2.7% above what was expected in the June forecast. Meanwhile, The Center Square recently reported that real estate excise tax revenue has fallen to pre-2020 levels when the state Legislature switched from a flat rate to a graduated rate. At the same time, Seattle home prices have decreased every month since June; Seattle home prices as of June were .09% higher than the same time last year.
The state’s next revenue forecast will be presented to ERFC on Sept. 23.