Washington is experiencing a tough budget deficit, inflation is easing but still high as people feel pinched at the grocery store, and financial institutions nationwide are forecasting a recession closer to the end of this year, all of which could have real impacts on the average Washingtonian.
Goldman Sachs, a multinational investment bank and financial services company, forecasts a 35% chance of a U.S. recession this year, while J.P. Morgan Chase predicts a 40% chance.
Economists have identified many indicators that we're likely to see an economic downturn, such as negative Gross Domestic Product reported by the Atlanta Federal Reserve, which estimates the nation's domestic output decreased by 2.8% in the first quarter this year. Experts also predict "stagflation" — a combination of slowed or stagnant growth with high inflation, usually accompanied by increased unemployment.
President Donald Trump's tariffs targeting the country's largest trading partners, along with reciprocal tariffs and declining consumer confidence have driven market anxiety.
Spokane credit unions and nonprofits say many resources are available, and with early planning, they can help prepare people for an economic downturn. Local organizations such as Spokane Neighborhood Action Partners, or SNAP, can help people with financial planning, navigating debt and setting up savings accounts so they can develop their own rainy day fund.
While the future federal financial outlook appears bleak, Washington state lawmakers are already addressing an expected deficit of $15 billion over the next four years. Senate and House Democrats have released budget proposals to increase taxes on wealthier residents and increase spending for some programs, which in some cases conflicts with Gov. Bob Ferguson's proposal, which includes no new taxes and calls for program cuts.
Senate Democrats have outlined new taxes to shore up funding for critical programs that will help vulnerable Washingtonians with special education, complete Spokane's North-South freeway project, continue funding for school meals and post-secondary education assistance, and reduce the state sales tax to help alleviate some financial burden.
The work of state lawmakers and city officials to craft contingency plans for an economic downturn can only do so much. Ultimately, experts say a proactive approach with personal budgeting — including creating a rainy day fund with local financial institutions such as Spokane Teachers Credit Union, or STCU, and seeking out local resources available at organizations like SNAP — can be the best way to prepare.
LOOKING GLASS
The average Spokanite can't control the global economy or what is happening in tariff wars, but they can prepare for a "rainy day" situation to be able to better ride out an economic downturn.
Lindsey Myhre, executive vice president and chief financial officer for STCU, says the first step to preparing for an economic downturn is understanding one's financial habits.
"They need to understand how their money works and where it goes," Myhre says. "What are the critical expenses? What are those things that are pretty important? And then what are some of those luxuries they spend money on?"
Myhre says that once you understand your spending habits by looking at the past couple of months, you can begin to see a process for budgeting. She also recommends saving at least $10 a week, which can build up substantially over time.
STCU offers a savings account that can help you build a 5.1% annual percentage yield, which means your savings receive compounded interest. Unlike other risky investments like stocks, a savings account is federally insured and will protect your money up to $250,000.
When considering potential auto or home loans or refinancing, Myhre says working with your loan providers is key, but people should understand that interest rates are higher today than five years ago. She suggests consolidating your credit card debt to a lower interest rate or lower monthly payment to give yourself a reset.
Myhre says you shouldn't be afraid to talk with your creditors and consider potential options through dialogue. At STCU, Myhre says there are financial relief solutions available, but reaching out in advance is important to avoid a financial crisis.
Phone apps like Robinhood make it easy for everyday people to invest in the stock market, but it's also easier to panic sell as investments plummet due to the unpredictability of economic policy under the current administration. Myhre says to remain calm when thinking about your investments.
"Economic cycles are part of the world," Myrhe says. "Stock markets go up, and stock markets go down."
If you decide to sell stocks or are looking for a safer investment, savings certificates can help and are 100% insured, Myhre says.
Ultimately, Myhre says there are many options to prepare for an economic downturn but individuals have to be proactive and work with their financial institutions to create a safety net or rainy day fund. She also says that remaining vigilant is essential because scammers are more likely to commit fraud in economic downturns.
"When times are hard and you get stressed, sometimes you might become a target of a fraud or a scam, and you want to be careful about those links you're clicking," Myhre says. "We always want to remind people to be aware, stay calm and make plans."
LOCAL RESOURCES
Spokane Neighborhood Action Partners, or SNAP, is a local nonprofit that was founded in the 1960s during the civil rights movement, says Garrett Havens, the organization's chief administrative officer.
SNAP's mission is to provide financial opportunities and help for individuals and families in the Spokane community, Havens says. Many of its programs can help during uncertain times, he adds.
"Our Energy Assistance Program focuses on helping households manage heating and utility costs," Havens says. "That's one immediate opportunity that is potentially available for folks who are experiencing a crunch right now."
For someone who owns a home, SNAP's weatherization program could also help reduce utility costs by providing a grant to make the home more efficient and better sealed against the harsh weather in our region.
Havens says it's important to get a head start on these programs because there are specific appointment dates, and some applications take time to process. He says a call discussing your situation can help you see what programs you can qualify for.
SNAP's financial counseling can also help people better understand their financial situation and how to manage their money, he says.
"Through those programs, we're able to offer budgeting, debt management and credit building assistance for those who are looking into that," Havens says.
Similar to Myhre, Havens says that creating a budget that includes $20 contributions to a savings account every paycheck can help people prepare for an unexpected expense or economic crisis.
In 2024, Fair Health Prices Washington, a partnership of patient groups, nonprofit consumer advocacy organizations and labor unions, conducted a 1,000-person survey in Washington. The survey found that 67% of respondents would struggle or could not afford to pay an unexpected $500 medical bill.
Havens says that navigating the many resources available at SNAP can be overwhelming, but he wants people to call early to get started.
"If you know things are going to get tough, you don't have to wait until it's a crisis before you reach out to SNAP," Havens says. "We can provide you with guidance and connect you with services that can help make those crises less severe and easier to navigate."
GOVERNMENT PLANS
Washington lawmakers are currently debating how to fund the state's next biennial budget. In addition to proposed tax increases and spending cuts, they will consider labor cost saving measures like Ferguson's proposal to have all state employees take one furlough (unpaid) day off each month.
State Sen. Marcus Riccelli, D-Spokane, who is also the Senate majority floor leader, helped champion legislation in 2023 requiring schools with 40% of students (or more) who qualify for free or reduced lunch to provide free lunch and breakfast to all students.
Riccelli and his colleagues are looking to maintain that and protect other vulnerable populations during this tough budget cycle.
"We're in tough times right now, so we're trying to harden our support for our working families, particularly some of our most vulnerable," Riccelli says. "I think we do that by funding the essential services, not going backwards, and making investments where we can."
Riccelli says popular programs like the Washington College Grant are great equalizers during economically tough times. The grant, which can range from $1,400 to $6,100, varies depending on the institution you attend. Providing pathways to higher education or apprenticeships in high-demand fields can positively impact financial prosperity for state residents.
Riccelli also has a debt reform bill moving through the Legislature that would remove medical debt from Washingtonians' credit reports. The bill would help the 29% of Washingtonians whose medical debt harmed their credit score.
He says maintaining current child care investments, the working families tax credit and the widely popular college grant program all come with costs. Senate Democrats are looking at increasing gas taxes by 6 cents and implementing a $10 tax for every $1,000 of intangible assets like stocks and bonds for individuals with more than $50 million in such assets.
Although the gas tax would affect Spokanites, Riccelli says it will ensure that the North Spokane Corridor is completed on schedule. He also says that a proposal to reduce the state sales tax from 6.5% to 6% would help Washington households struggling with current high costs.
Riccelli also points to a controversial rent stabilization bill as a way to help protect people during a potential economic downturn. House Bill 1217 would set a 7% limit on annual residential rent increases.
"More and more people are faced with issues of not being able to afford rent, and if they are, they get rents jacked up," Riccelli says. "Forty-one percent of Spokane residents are renters, and about 43% [of them] spend more than 35% of their income on rent."
Even with potential new taxes, Senate Democrats would like to tap $1.6 billion from the Budget Stabilization Account, a state-level rainy day fund, which would have $92 million remaining (virtually depleted) if that happens.
The Budget Stabilization Account was created in 2007 through Senate Joint Resolution 8206, which Spokane Mayor Lisa Brown sponsored when she was a state senator. The bill was featured on ballots that year and approved by voters. The nation would experience what became known as the Great Recession starting in 2008.
Brown says that after the 2001 legislative cycle, which saw deep cuts, lawmakers saw the need for the stabilization account to prevent such deep cuts in future legislative cycles.
"The idea was just to have more stability over the course of the business cycle," Brown says. "At the city level, we have a couple of different accounts that are tied to different contingency plans."
Brown, an economist, says cities often don't make decisions about economic downturns until state and federal budgets are set. She says her biggest and most immediate concerns are the potential federal and state cuts to housing and homelessness funding.
According to city spokesperson Erin Hut, the city's current budget included modest approaches to protect the city in the long run from potential financial uncertainties.
Brown says it's often difficult to predict economic changes, particularly for the city level, but they are cyclical in nature, with upswings and downswings.
"Economists have a bunch of different indicators that they look at to try to predict when there's an actual downturn and when the actual upturn is going to happen," Brown says. "But that's not a perfect science." ♦
– Eliza Billingham contributed to this article.
