Mixed Economic News Sets Up Tomorrow's State Revenue Forecast

Tomorrow's revenue forecast comes midst what Jerry Cornfield at the Everett Herald calls a jumble of news on the economy. The key indicator for many of us is rising unemployment, which state forecaster Arun Raha anticipates to continue to climb even as the recession touches bottom in the next few months. We're at 9.4 percent now.

Business Week reports that corporate executives surveyed by McKinsey & Co. are slightly upbeat, if only on a relative basis.

Executives around the world have grown more upbeat about current economic conditions in recent weeks, but only a minority expects an upturn this year, a McKinsey & Co. global survey shows. And, even as a rising number expects profits to grow this year, more expect to cut work forces than to hire.

And this:

...American executives are more upbeat than their European counterparts. While some 20% of all the respondents suggested that current economic conditions are better than they were in September 2008, only 8% of those from Europe felt that way.

The Nashville Post reports this as "hey, at least we're not in as bad a shape as European," one of the weakest rallying cries I can imagine.

Greg Lamm does a nice job of putting this recession in perspective in the Puget Sound Business Journal.

As for signs of when the recession might be bottoming out, state labor economists say it’s too early to tell. They say they would need to see at least three consecutive months of improved unemployment stats before they might make that call.

By that measure, we might not be able to call it over until early 2010, at best.

In my column in The News Tribune, headlined "pillars of state economy shouldn't be taken for granted," I note competitive pressures facing aerospace and software (aka Boeing and Microsoft). A report from The London Times yesterday underscores an aerospace risk. An account of ongoing disputes between Europe and the U.S. over aid to Airbus, quotes Boeing CEO Jim McNerney.

Mr McNerney also indicated that he was willing to consider locating a second production line for the 787 outside of Boeing’s traditional base in Seattle because of an on-going battle with unions.

He said that all sites would be considered but a US factory was most likely. Boeing’s Seattle union shut down production for about six weeks last year in a dispute over pay costing the company several billion dollars in lost earnings and compensation payments.

Mr McNerney said: “We had delays because of union problems and that has been very costly to us and our customers and that has to change.”

Factor that into your assumptions about our rebound from the recession.