Quarterly Economic and Revenue Forecasts

UPDATED: July 12, 2022
This quarterly forecast includes our analysis of current economic conditions and our objective projections of future revenue for state trust funds and their beneficiaries.
For Economic and Revenue Forecasts from 2013 and prior years, contact the Office of Budget and Economics by phone at 360-902-1730 or by email at obe@dnr.wa.gov.

Forecast Summary

Coronavirus pandemic1
The COVID-19 pandemic has significantly altered the economic landscape. It has affected almost every aspect of economic life, from consumer behavior and purchasing decisions to production and supply chain operations. And although the threat of large-scale COVID-19 lock-downs seems to be gone, at least for the moment, it is clear that the disease can still cause widespread disruption even without significant government action.
However, with the waning of the Omicron variant and no new variant vying to replace it (again, at least for the moment), we are back to where we were in early 2021 — cautiously optimistic that the worst of the pandemic is behind us. The new case rate has fallen from around 805,000 cases per day to 135,000, while hospitalizations and deaths are also falling, though not as steeply. Around 65 percent of the United States population is vaccinated, which will likely help limit deaths from another wave, and new are antivirals available to help treat the disease.
Having said that, a meaningful part of the COVID-19’s effect will depend on how other countries react to outbreaks. China, in particular, is following a zero-COVID policy. The effect of this is that even a couple of cases can put a city into lock-down. If those cities happen to be a port cities, like Shenzhen or Ningbo-Shoushan, then even small outbreaks can disrupt international shipping, cause supply-chain issues, push up costs and inflation, and cause all sorts of economic turmoil.
Unfortunately, even if there are no more shutdowns, many of the pandemic’s larger economic effects are already working their way through the economy, will take some time to resolve and continue to pose risks to economic growth. These include chip shortages, supply chain bottlenecks, altered consumer behavior from services spending to more goods spending, etc. As an example of how things are unlikely to change quickly, car manufacturing delays due to chip shortages emerged in late 2020, leading to constrained car supplies and extraordinary prices in late 20212. Even if COVID-19 were to disappear from the U.S., the chip shortage would not end immediately and it would still take some time for car manufacturing to return to normal.
Taken all together, the forecast is now built with the expectation that the pandemic will continue indefinitely, but this is unlikely to seriously affect DNR revenue. DNR revenue comes predominantly from timber, with some from agriculture and other uplands leases as well. Timber prices are largely driven by the demand coming from housing markets and agricultural revenue is largely driven by the prices of agricultural products. These will be discussed in their respective sections of the forecast — but, in short, although these sectors have their own risks, they will likely be largely unaffected by the ongoing pandemic.
Even without clear effects such as stay-at-home orders, the ongoing pandemic, with waves of variants like Delta and Omicron, will probably still have some effect on the economy, though some will likely be more insidious and difficulty to quantify, and occur over a longer time horizon. The repercussions could include things such as:
  • Reduced demand for services or fluctuations in demand for different types of goods and services as people change behavior dependent on whether there is a spike in cases.
  • Disruptions to shipping, both international and domestic, because of overrun ports and outbreaks in port cities, as happened in mid-Augus at Ningbo-Zhoushan, the world’s third largest container port3.
  • Reduced economic output across the global economy due to outbreaks among labor in other sectors, further disrupting supply chains.
  • Reduced labor availability due to school closures or availability.
  • Impaired productivity growth due to long COVID (ongoing symptoms that can severely affect normal life after the illness) affecting a meaningful portion of the workforce — current estimates are that between 10 and 30 percent of those infected are affected by long COVID 4.
To summarize, the assumptions underlying this forecast are:
  • There will be no more stay-at-home orders or significant limitations on economic activity by governments in the U.S.
  • Successive waves of COVID-19 will not cause major disruptions to DNR revenue streams, which are relatively insulated from the direct effects of COVID-19.
  • Even if new COVID-19 infections drop substantially, it will not create a meaningful boost in economic activity that will affect DNR revenues.
Having written all that, the COVID-19 pandemic is still a wild card and significantly increases the potential risks and volatility of DNR revenue. This does not affect the point forecasts provided, but it does increase the range of potential and equally likely outcomes.
Lumber and Log Prices. Lumber prices have been exceptionally volatile the past two years. In late 2021, prices peaked at around $1,600/mbf in May then plummeted to $414/mbf in August (West Coast standard or better 2x4, Douglas-fir/Hemlock). Prices rebounded over the next several months to $1,200/mbf in January. Since mid-January, the CME cash price for lumber shows it dropping to $1,300/mbf to $900/mbf in early February and then rebounding to $1,300/mbf again in mid-February. Demand remains high and prices are expected to remain than they have historically been through 2022, even if they fall from their current level.
The high lumber prices pulled up log prices, with the price of a "typical" DNR log rising from a low of $498/mbf in April 2020 to peak at $718/mbf in April 2021. These are very high historically, but interestingly, still below the highs of early 2018. Since April, log prices have softened, averaging $660/mbf over the last six months of 2021. This is, notably, still higher than the prices of early 2020. Log prices are expected to increase a little through 2022.
Timber Sales Volume. DNR currently plans to offer around 530 mmbf for sale in FY 22. However, some of that volume is at risk. There is currently a proposal to limit DNR timber harvests to only stands less than 120 years old. If that proposal were implemented, around 15 to 20 mmbf would likely be removed from sales planned for FY 22. Additionally, there is always the risk that some sales plans are not completed in time or that the sales are passed in with no bids.
Given the above, the sales volume forecasts are unchanged for this forecast.
Timber Sales Prices. In the last forecast we were wary of increasing the sales price forecast because the prices for the August and September auctions were lower and had more no-bids than previous auctions. The auctions since then have assuaged those reservations with a weighted average price of $406/mbf. The forecast timber sales prices are increased to $380/mbf for FY 22 and $350/mbf for FY 23. This may still prove to be too conservative if demand remains as strong as it is currently.
Timber Removal Volume and Prices. The removal volume forecast is unchanged in all years. Removals to date in FY 22 are in line with expectations.
Removal prices are increased due to changes in the value of timber in inventory (sales have been selling for higher prices than we had forecast) and the increased sales price forecast.
Timber Revenue. Timber revenue in all years is increased due to the adjustments in removal prices.
Timber revenues for the 2021-23 biennium are $371 million — around 4 percent higher ($14 million) than previously forecast. Forecast revenues for the 2023-25 biennium are increased to $353 million — around 3 percent higher ($11 million).
Non-Timber Revenues. In addition to revenue from timber removals on state-managed lands, DNR generates sizable revenues from managing leases on uplands and aquatic lands.
Forecast uplands revenue for FY 22 is decreased by $0.5 million to $46 million, due to slower revenue from orchard/vineyard leases and from rights of way.
The aquatic lease forecast for FY 22 is increased slightly due to increased expectations for water-dependent revenue offsetting decreased expectations for mineral and hydrocarbon extraction on aquatic lands.
The geoduck forecast revenue for FY 22 is increased to $18 million, and by various amounts in outlying years, based on sustained high prices increasing our price forecast. The revenue forecast for geoduck would have been increased more if harvests for did not face significant risks in all years. Paralytic shellfish poison harvesting closures are a major risk — harvesting on one of the more valuable tracts was unavailable for a time due to PSP. Additionally, there are serious issues with compliance vessel availability. Of the five boats DNR has for compliance monitoring, only two are regularly in working order at any given time. The rest need repairs, but these have been delayed indefinitely because the parts are unavailable. Finally, a slew of other risks remain, including labor shortage risks from a small pool of licensed divers, the potential for China to ban geoduck imports for a variety of reasons, and sewerage contamination from flooding run-off closing tracts. Additionally, geoduck are still covered by tariffs initiated during the ’trade-war’ between China and the US from 2018. These have been suspended during the COVID-19 pandemic, but they are still on the books.
Total Revenues. Revenues for the 2019-21 biennium (FYs 20 and 21) were $503 million. The forecast revenue for the 2021-23 biennium are increased to $523 million, and the forecast revenue for the 2023-2025 biennium are increased to $506 million.
Other notes to the Forecast. In addition the ongoing a COVID-19 resurgence, a number of sources of uncertainty may affect DNR revenue specifically, and the overall economic activity more broadly. These include: legal challenges to the sustainable harvest volume and marbled murrelet conservation strategy; uncertainty about the type and quality of stumpage DNR is able to bring to market more than six months out; the ongoing trade war and political tension with China directly affecting timber, agricultural products and geoduck exports and prices; supply chain issues across the world economy threatening to undermine economic growth more broadly as well as affecting timber-specific industries, such as a lack of glue impairing plywood manufacturing or the slow-moving default by one of China’s largest real estate developers. Additionally, although the timber sales volume estimates are based on the best available internal planning data, they are subject to adjustments due to ongoing operational and policy issues.
From the beginning of 2018 until just before the COVID-19 pandemic, the U.S. and China engaged in an escalating trade dispute. Prior to the pandemic, the tariffs on geoduck were 25 percent and were a significant driver of the drop in geoduck prices in late 2019. The log tariffs and a slowdown in housing starts were the major contributors to the lower domestic price of logs through late 2019. With the pandemic, tariffs were reduced to 5 percent tariff on geoduck, wheat, and softwood logs. There is no indication that tariffs between the countries will be reduced further or removed soon.
In addition to the coronavirus and the trade tensions discussed above, other things could undermine Chinese demand for wood, such as the continued loss of Pacific Northwest market share to international and Southeastern U.S. competitors.
Another issue on the horizon that should be mentioned in relation to timber markets is that Russia appears to be moving forward with legislation banning the export of timber from the beginning of 2022. It appears that they have banned exports to Japan, but unclear whether that extends to other countries. Given that Russia supplies around 12 percent of world log exports, the ban will have a significant impact on log supply across the world. In the short term, this will likely push up log prices across the world, and will mainly affect China, which gets a significant amount of logs from Russia. This will also likely push up lumber and wood product prices. This has not been built into the forecast prices.
Finally, climate change has emerged as a more meaningful immediate risk as opposed to an amorphous risk in the far future, as previously rare extreme weather events become more common. Most recently, in September and October, extraordinary rainfall in British Columbia destroyed roads and railways, essentially halting timber harvests and lumber production and timber exports through the Port of Vancouver. Additionally, the drought in Washington this year appears to have decreased wheat production on DNR lands by about 40 percent.
Droughts and high temperatures are also increasing wildfires. Although these do not appear to have seriously affected revenue from DNR timberlands since 2015, they pose a significant risk to both our short-term timber revenue forecast, potentially destroying standing timber under contract, as well as long-term revenue by destroying younger stands that would be harvested in future decades. Recent research suggests that the massive fires in Oregon around Labor Day 2020 caused not only immediate damage, but will reduce future Oregon harvests by 115 to 365 mmbf per year for the next 40 years. That, with the more immediate damage of the fires, suggests an overall economic impact of $5.9 billion5.

  1. As a reminder, we are not epidemiologists or experts on public health or pandemics. This section is written with our best understanding of the pandemic and its dynamics gathered from reputable sources with the aim of translating those into likely broader economic effects and then more direct effects on DNR revenue. In addition to the significant uncertainty still surrounding the future path of the epidemic even for experts, uncertainty arises from our limited experience and understanding.
  2. https://www.ft.com/content/13094950-fb45-4686-9ef9-8199c674b90d
  3. https://www.ft.com/content/e1263950-1173-4832-a011-ada04df1e93c
  4. https://pascdashboard.aapmr.org
  5. 2020 Labor Day Fires: Economic Impacts to Oregon’s Forest Sector, Oregon Forest Resources Institute ''https://oregonforests.org/sites/default/files/2021-09/OFRI-LaborDayFiresEconomicReport_Final 2021.pdf''

Fiscal Year 2022

September 2021  |  November 2021  |  February 2022  |  June 2022



Fiscal Year 2021

September 2020  |  November 2020  |  February 2021  |  June 2021



Fiscal Year 2020

September 2019  |  November 2019  |  February 2020  |  June 2020*

*Not completed due to COVID-19 pandemic.


Fiscal Year 2019

September 2018  |  November 2018  |  February 2019  |  June 2019



Fiscal Year 2018

September 2017  |  November 2017  |  February 2018  |  June 2018



Fiscal year 2017

September 2016  |  November 2016  |  February 2017  |  June 2017



Fiscal Year 2016

September 2015  |  November 2015  |  February 2016  |  June 2016



Fiscal Year 2015

September 2014  |  November 2014  |  March 2015  |  June 2015



Fiscal Year 2014

September 2013  |  November 2013  |  February 2014  |  June 2014


Office of Budget & Economics
1111 Washington St. SE 
MS 47001
Olympia, WA 98504-7001
Fax 360-902-1775