SEATTLE — The latest prediction from the Washington State Economic and Revenue Forecast Council shows the state’s budget situation continuing to deteriorate.
The data suggests troubling times ahead of people’s own budgets as well.
The Council expects the State’s General Fund shortfall to grow by another $903 million by 2029, even after lawmakers and Governor Ferguson increased taxes and cut spending in the last legislative session in order to try and balance the budget.
The data shows that most of the decrease, around $681 million, comes from decreasing retail, sales, and businesses and operating taxes.
“It just really confirms what I think most people are struggling with which is affordability. Every day, Washingtonians can see costs going up and businesses are seeing expenses going up,” said Eli Taylor Goss, the executive director at the Washington State Budget and Policy Center.
The report predicts unemployment will increase from 4.5% today to 4.9% in 2027. That slowed economy could drop the state’s GDP from 1.7% this year to 1.5% next year.
The rising unemployment, decreasing spending, and prices that continue to rise according to the Consumer Price Index and create a unique recession called “Stagflation,” according to Elizabeth Pancotti, the managing director of policy and advocacy at the economic think tank Groundwork Collaborative.
“The combination of those things isn’t good. It means that real incomes are likely to go down as prices rise. We might see an uptick in unemployment given that businesses are really pulling back on hiring.”
Washington is particularly vulnerable at this moment.
Tech sector layoffs have come in waves over the last two years, and tariffs are impacting traffic at the state’s ports. The state of Washington has reported 40% of jobs are somehow reliant on trade.
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