Washington's economy is slowing significantly, although it is not clear if the state will slip into a recession. At the national level, recessions are proclaimed after the fact by the National Bureau of Economic Research. So far, no official recession proclamations have been issued, even though the national economy has exhibited many signs of slowing. As of January, Washington's nonagricultural employment level is still rising, albeit at a slower rate than in prior months. However, as shown in the accompanying graph, employment declined in seven manufacturing sectors, as well as in natural resources and the financial industries. Housing starts are less than half what they were a year ago. For this state, the outlook depends most significantly on four factors:

• The overall national economy, which is growing very slowly and showing a number of troubling signs including troubled financial markets, rising prices and unresolved problems in housing;
• The slowing demand for consumer-oriented imports, which account for most activity in our major ports;
• Employment at Boeing, which is unlikely to decline in 2008, given the backlog of sold but not yet delivered aircraft; and
• Employment in high tech, especially at Microsoft.

Overall, the state is poised to do better than the nation, and the national economy may yet scrape by with significant slowing, but short of recession.

Paul Sommers is a professor at the Institute of Public Service and Albers School of Business at Seattle University.