Harger: Economist says Washington is already in a recession

Remember that warning light on the state budget dashboard we talked about a few days ago? Well, now the engine’s steaming and we’re pulled over on the shoulder.

Mark Zandi, chief economist at Moody’s Analytics, just told MarketWatch that 22 states are already in recession. Not heading toward one. Not at risk of one. Already there. And Washington made the list. He believes Washington is currently in a recession.

Now, economists have conflicting opinions about where we’re headed. But nobody’s saying our economy is great. And when a prominent voice like Zandi says we’re already in recession, that’s worth taking seriously.

A recession means more people lose jobs, fewer people shop and eat out, and businesses pull back on everything. When families stop spending, tax revenue falls. And it is falling. State economists just told us we’re looking at nearly a billion dollars less than expected over four years.

For a state that just maxed out its credit card on new programs, that means the money we’re counting on to pay for schools, roads, and public safety starts drying up fast.

Layoffs from local companies

The warning signs are everywhere. Microsoft has had this constant drip of layoffs for months. Last week, Starbucks Corporate cut hundreds of jobs at its Seattle headquarters. When companies that anchored our boom times start trimming, that’s mortgage payments and grocery bills for thousands of local families.

Let’s be clear about something. State spending has more than doubled in just over a decade, not because of inflation or population growth, but because we keep adding new programs. We just passed a $9 billion tax increase, and revenues are still coming up short. Why? Because no matter how much money comes in, we’re spending it even faster.

That tax package that’s kicking in? Lawmakers rushed it through in just nine days earlier this year, hitting 90,000 businesses. Nine days. Small IT companies saw their prices jump 10 percent overnight. The whole thing was so rushed that businesses didn’t even know which customers they were supposed to tax. Now, those same businesses, which are being hit with new taxes, are also dealing with falling demand.

This is bad news for lawmakers who return to Olympia in three months. They’re still talking about maintaining all the new programs as if nothing has changed. But if Zandi’s right, everything has changed. If we’re already in recession, that spending habit is about to hit reality like a brick wall.

The smart move? Prepare for anything. Be honest about what we can actually afford. Make sure the basics are covered before adding anything new. Because if you’re in a recession and don’t realize it, you’re making spending decisions based on revenue that won’t materialize.

Maybe Zandi’s wrong. Maybe we dodge this bullet. But wouldn’t it be better to prepare for tough times and be pleasantly surprised than to keep spending and get caught flat-footed?

We started with a warning light for the economy, now we’re on the shoulder with steam pouring out. We can keep debating whether that’s really steam coming from the engine, or lawmakers can grab the toolbox and get to work.

That’s the commentary for Oct. 6. How’s your corner of the economy doing? Text us at (888) 973-5476 or leave a comment at MyNorthwest.

Charlie Harger is the host of “Seattle’s Morning News” on KIRO Newsradio. You can read more of his stories and commentaries here. Follow Charlie on X and email him here. 

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