Archive

We have a lot to talk about this quarter. There is the immediate to consider – rate changes, current data changes, etc and then there is the more strategic – forecast accuracy, policy substructure impacts, etc. For fun, let’s throw in a new front in a trade war and increasing risks to property and a few more things from the back burner. It is no wonder consumer confidence is in uncharted depths. But yet, we persist. Two different forecasts all indicate growth – at least for some people. This quarter, we have again increased our page count – we had a lot of thoughts to share. The monthly updates are sure to return to many of the thoughts presented here as well and we owe you a retail sales readout. We take our show on the road! If you are looking for a different kind of economics discussion – the kind that will engage your audience – we may be the call you are looking to make! In October, we will hit record on our next podcast and see what we think of the next 30 days. Daily, we will post 6-8 noteworthy items in our social media stream and invite you to keep up with us there.

Please refer to the Newsletter for details. Thank you so much.

The Puget Sound regional leading index declined 0.9 percent in the fourth quarter of 2025. The Initial Unemployment Claims index declined 0.7 percent quarter-to-quarter and 1.0 percent year-over-year. However, the labor market remained fragile, as layoffs continued and the impact of AI on the job market remained unclear and difficult to quantify. We are seeing the ripple effect of uncertainty across most of the data, and that is continuing to slow many aspects of the economy, driven by lower investment, fewer job postings, higher interest rates, rising inflationary pressures, and sustained consumer discomfort. These factors add to the challenges ahead, making close monitoring of economic trends especially important in the coming quarters.

As you are reading this forecaster in February 2026, it is important to remember that we are forecasting employment growth and other indicators for the end of the year 2025 using data that ends in early fall. Data lags matter, especially when conditions are changing rapidly - whether thinking about the impact of policy decisions (including tariffs) or technology (think AI). The key question for 2026 is whether recent corporate restructuring represents a cyclical pause in hiring or a more sustained recalibration of labor demand. In short, the strong growth reflected in the initial forecast period should be interpreted within the context of a labor market that is recalibrating rather than collapsing. National signals point to greater employer caution, but not to a generalized contraction. For Puget Sound, the path forward will depend on how concentrated corporate downsizing interacts with the region’s broader economic base and its capacity to absorb sector specific shocks.

In this edition, we take a deeper look at both national and state-wide forecasts. We expand our analysis of retail and real estate. And in a wonderful twist of timing, we even talk with you about the weather. We did not produce our unusual forecast tables due to unavailability of government data. We will produce the forecast tables once data become available.

In this edition of the Puget Sound Economic Forecaster, we analyze second-quarter 2025 data and highlight the key trends shaping the region’s economy—both now and in the future. This forecaster also offers insights on a range of topics, including data reliability, interpreting economic signals ("Making Sense of the Noise"), the regional leading index, as well as current issues in housing and retail. We’re confident you’ll find this forecaster both engaging and informative, with plenty of opportunities for learning and exploration. Happy reading!

Well, that was fun! We want to thank you for your patience as we delayed publishing this edition of the Forecaster. Economists are struggling to deliver quality results due to a growing number of data challenges, which are rooted in consumer behavior, data availability, data revisions, and seemingly contradictory signals and historical patterns. We are faced with a mixed set of indicators in our region, much like on the national stage. For now, we are going to stick with the economy continuing to grow, but at a slower pace and with more volatility than we are used to seeing. It is also possible it may slow more than we are predicting. At the Federal level, we seem to have one foot on the gas and another on the brake, and very little overall policy consistency to know which is the better option. Layered on top is a similarly mixed bag of foreign policies. In July, we will hit record on the next podcast and see what we think of the next 30 days. Daily, we will post 6-8 noteworthy items in our social media stream. Be sure to join us for those! We also do live presentations throughout the state. If you are interested in having us talk with your group, please let us know.

Our regional and national economy are at a crossroads created by significant policy changes and uncertainty related to future changes coming from the other Washington. It is easy to be lulled into a state of complacency by looking at trend data without considering the scale of disruption that is occurring in real-time. Trend data relies on somewhat stable conditions. Due to data lags forecasts must first forecast the recent past before working forward. This compounds the potential risk for errors in the projections. On Tuesday morning Trump doubled the tariffs on Aluminum. The futures market and pricing adapted in real time – but will the tariffs actually persist? Who knows and that becomes the challenge. Consumer confidence is falling. Consumer spending is falling. Neither are a good indicator. As safety net programs are reduced it will impact spending more. It becomes self-feeding cycle quickly which starts the conversation that begins with r. Trend data is unlikely to warn us of a recession, but other data does – and it is flashing faster and faster. In mid-April we will hit record on the next podcast and see what we think of the next 30 days. Daily we will post 6-8 noteworthy items in our social media stream. Be sure to join us for those! We also do live shows throughout the state, if you are interested in having us talk with your group, please let us know.

Our current relationship status with the economy is complicated. On one hand there is a lot moving in the right direction and on the other hand we have a significant sense of foreboding conversations in the months ahead. This quarter we developed a number of topics to help you be the most informed person at your holiday gatherings – or at least armed with an alarming number of random facts to deflect dicey relatives. Prepare to work your way through discussions on future potential/threatened policies, consumer behavior, shopping trends, housing affordability (thank you Mathew Gardner!), retail sales, construction and to bring it all home, the Washington State forecast. In mid-January we will hit record on the next podcast and see what we think of the next 30 days. Daily we will post 6-8 noteworthy items in our social media stream. Be sure to join us for those! We also do live shows throughout the state, if you are interested in having us talk with your group, please let us know.

We are once again adding bonus pages to our quarterly report. There was simply too much fascinating and informative content to leave on the virtual editing floor. Being nerdy economists, we considered that it is your paper and ink in the end, and we found ourselves incentivized to keep all of it. We can save the debate on cost transfer for another day. Sit down with a large beverage and give yourself time to digest this quarter’s report. We want you to struggle with variations within the economy, national debt implications, trade implications, retail patterns and even housing. Find someone to debate these topics with. We hope that all of this will prepare you for the intense conversations in the months ahead as we look to elections and the implications that come with those decisions. In mid-October we will hit record on the next podcast and see what we think of the next 30 days. Daily we will post 6-8 noteworthy items in our social media stream. Be sure to join us for those! We also do live shows throughout the state, if you are interested in having us talk with your group, please let us know.