A Double Dip Recession for Washington State?

At the national level a double dip recession occurs when gross domestic product (GDP) growth slides back to a negative number after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession. Right now all across the nation, economists are starting to sound the alarms that we may be sliding into a double dip.

Breaking News: (In a stunning dramatic moment in testimony before Congress today, Fed Chief Ben Bernanke at first said he thought we might not have a double dip recession but then said that he was concerned about the "unusually uncertain" on going economic outlook for 2010!
The markets reacted immediately with the NYSE down triple digits and the dollar picking up a healthy dose of value as investors fled to cash on Bernanke’s comments. I talked to two local economists about the Fed Chief’s remarks and they all said that they now believe that Bernanke does think we are headed into a DOUBLE DIP RECESSION.)

On the state level a double dip is typically defined as positive economic growth (jobs, home sales, construction and etc.) following a recession when that growth peaks out and a new recession follows. If the July job numbers for the Evergreen state show a major decline, we will officially be in a double dip. One of the major signs of a return to recession is always evidenced by the results in the housing market and this week that news was a major disaster.

New home permits issued YTD were a terrible disappointment in WA State coming in at 6,470, a paltry increase of less than 2,000 from last year; thus reflecting the record number of foreclosed homes on the market in King, Pierce and Snohomish Counties.

To make matter worse housing starts (new construction) slid to a low equal to the October construction off season last year; a major decline in employment in Western Washington.

Reflecting the economic reality on the ground the national home builder confidence index fell to the lowest level in 12 months, not good news!
Here is the story from the National Association of Home Builders.

However, the big disaster in Western Washington was the multi-family construction permits that were issued and that number came in at 10% less than the disaster in 2009 YTD; a major problem with jobs in the industry. Only 1,910 permits were issued this year to date. In Seattle, Bellevue, Tacoma permits for multi-family construction was down some 17% year over year a catastrophe for the building industry. Olympia was one of the hardest hit down 100% from last year. Even though rentals are currently in high demand, particularly from folks who have given up their homes to foreclosure, the building industry in Western Washington is saying that the banks are refusing to finance multi-family construction projects because of the new strict FDIC reserve requirements required not just for the large banks, but the local community banks as well.

To illustrate the magnitude of this disaster, RealtyTrac is reporting that there are currently some 32,427 foreclosures in the Evergreen State year-to-date.

The hardest hit counties are Snohomish, Skagit, and Pierce. That reflects the hardest hit areas for jobs in construction this season and one of the reasons for persistent unemployment in these metro counties.

Editorial comment: I have followed job numbers in our state for more than 35 years. I also follow the economy closely and I have a vast background in math and statistics, so no-one in the left stream media can misrepresent the unemployment situation with bogus “seasonably ADJUSTED” numbers and get away with it; as the false reporting business writer Drew DeSilver at the Seattle Times and Mike Benbow at the Everett Herald both found out to their chagrin! We are in serious economic trouble because with retails sales in the tanks for two straight months in a row and B&O tax revenues along with the resulting decline in sales tax revenue, means that the state is coming very close to being insolvent in the next budget year. I am hearing that the next state legislature is facing a $9 Billion dollar hole!