(The Center Square) – The Seattle Office of Economic and Revenue Forecasts is sticking with a baseline forecast for 2025 and 2026 revenue totals despite the lingering chance of a future recession.
The office presented its October revenue forecast on Monday, predicting a modest increase in Seattle’s total general fund revenue: about a 0.3% bump from the August forecast to $1.63 billion in 2025 and a 0.5% increase to $1.7 billion in 2026.
So far, Seattle has collected about half of the total general fund revenue for 2025.
The approved-baseline revenue projection comes despite the dramatic spike in uncertainty in the U.S. economy due to President Donald Trump’s “Liberation Day” tariffs that were announced on April 2. The stated goal was to reduce trade deficits and boost American industry, though the policy was met with warnings of negative economic impacts and potential retaliatory tariffs from other countries
“The probability of a recession is still highly elevated – it has not changed since the August forecast,” Seattle Chief Economist Jan Duras said during Monday’s presentation, noting the Wall Street Journal’s survey of economists putting the probability around 33%
The Seattle Office of Economic and Revenue Forecasts’ October pessimistic forecast assumes a recession with weak consumer spending, resulting in about $33.5 million less in general fund revenue over two years, excluding grants and transfers.
“This would not be a very deep recession, it would be more closely resembling the 2001 recession rather than the [COVID-19] pandemic,” Duras said.
Earlier this year, the Office of Economic and Revenue Forecast adopted a pessimistic forecast for the first time ever, as a result of global economic uncertainty. The October forecast comes as the S&P 500 index has grown about 5% since Aug. 4 and more than 30% since April when the second tariff announcements were made by Trump.
Washington is seeing downward revisions in employment, including in King and Snohomish counties, where jobs declined by 0.7% – or about 13,000 jobs – in the first eight months of 2025 compared to the same period in 2024, according to the presentation. In the office’s October baseline scenario, employment growth is expected to resume in 2026, though below 1%.
The weaker regional labor market is reflected in consumer spending, with debit and credit card spending declining about 3.6% in the Seattle metro area while growing about 0.9% nationally. Declining revenue trends are largely due to a downturn in the construction sector, according to the presentation, though weaker retail trade and hospitality sector revenues are also contributing.
The economic uncertainty creates a wide range of possibilities for the city’s budget, from a $70 million surplus in an optimistic forecast to a $90 million deficit in the pessimistic forecast assuming a recession. Seattle City Councilmember and Budget Chair Dan Strauss noted this range.
“Either we may have $70 million more next year, or if only a few things go wrong, we could be at a $90 million deficit – that is functionally the difference between people receiving food, shelter [and] social services the city provides, especially as the federal government continues to withhold, withdraw, or cut funding for the very programs they should be responsible for,” Strauss said.
