Washington Economy Growth Plan and Business Climate 2026

Key Points

• Declining Confidence: According to a statewide employer survey by the Association of Washington Business (AWB), only 10% of employers rate the state economy as strong.
• Rising Pessimism: Nearly four in ten employers (38%) describe the state economy as weak, marking a notable increase from 26% the previous year.
• Relocation Pressures: Although down from a peak of 25% last quarter, 16% of surveyed businesses still plan to relocate out of Washington, remaining significantly higher than the 11% recorded a year prior. Furthermore, those considering a move are further along in active research and planning.
• Expansion Outlook: One-third of employers intend to expand their business operations outside of Washington, contrasted with only 14% planning to expand within state borders.
• Tax and Regulatory Burdens: Seventy-one percent of respondents cite taxes as their primary business challenge—up from 57% the previous summer—following a $9.4 billion tax package passed in 2025 and a new income tax introduced in March. Additional pressures include government regulations, healthcare costs, inflation, and fuel expenses.
• Calls for Fiscal Discipline: Former Governors Gary Locke and Christine Gregoire, alongside business leaders participating in joint sessions hosted by AWB and the Washington Roundtable, have urged policymakers to restore budget discipline, adopt predictable tax frameworks, and streamline regulations.

Washington (Evening Washington News) August 12, 2026 – Warning lights continue to flash red for Washington’s economy as employers grow increasingly pessimistic about the state’s commercial climate and look outside the state boundaries to expand. At this pivotal crossroads, business advocates argue that Washington urgently requires a comprehensive, long-term economic development plan capable of restoring investor confidence and securing future job growth.

How are Washington employers viewing the current state economy?

The state of business confidence has seen a steady downward trajectory over the past few years. In the latest statewide employer survey conducted by the Association of Washington Business (AWB), just 10% of participating employers stated that the state economy is strong. Conversely, nearly four in ten respondents—representing 38%—described the economy as weak, a sharp jump from the 26% recorded one year prior.

As reported by Kris Johnson, president of the Association of Washington Business, in a guest column published by the Chinook Observer and 425 Business, employer sentiment contrasts sharply with historical baselines. Johnson stated that

“warning lights continue to flash red for Washington’s economy,

emphasizing that business operators are becoming progressively more pessimistic and increasingly looking outside Washington to pursue expansion.

Why are businesses considering relocation or expansion elsewhere?

The survey data highlights continuous anxiety regarding the state’s fiscal and regulatory climate. While the previous quarter registered a dramatic spike with one in four respondents planning to move their enterprises to another state—generating nationwide headlines—the latest survey figure adjusted downward to 16%. Nevertheless, this metric remains well above the 11% baseline recorded a year ago.

Addressing these figures, Kris Johnson of the Association of Washington Business noted that

“it’s not surprising to see those numbers come down. While the initial shock over the state’s new income tax has faded, a growing number of businesses are still seriously considering relocation”.

Johnson added that many employers weighing a move are now further along in the structural process, actively researching alternative geographic locations or developing concrete relocation blueprints.

Beyond outright relocation, expansion trends heavily favour outside jurisdictions. One-third of surveyed employers plan to expand their operations outside of Washington, compared to a mere 14% intending to scale up within the state.

What are the primary challenges cited by business owners?

The survey points directly to state legislative actions as the core catalyst for commercial frustration. According to the AWB data, 71% of employers identified taxes as a primary operational challenge, climbing significantly from 57% during the previous summer.

Kris Johnson of the Association of Washington Business explained that this upward trend has accelerated

“since the Legislature passed a record $9.4 billion tax package in 2025 and followed it up with a new income tax in March”.

Aside from taxation, employers cited secondary pressures including government regulations, escalating healthcare costs, persistent inflation, and high fuel expenses.

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Are there any positive indicators on the horizon?

Despite deep-seated concerns over long-term fiscal policy, the survey uncovered pockets of cautious optimism. A higher frequency of employers reported that their core businesses are currently growing, more respondents anticipate adding net employees over the upcoming six-month horizon, and fewer business leaders anticipate an imminent economic recession.

However, Kris Johnson of the Association of Washington Business cautioned that

“the long-term decline in confidence in the state economy — and heightened interest in relocating to other states or expanding elsewhere — should be a wake-up call for policymakers and elected leaders”.

What recommendations are leaders offering to fix the economy?

In an effort to chart a corrective course, the Association of Washington Business and the Washington Roundtable convened a high-level summit in July, bringing together lawmakers and corporate executives to formulate strategies ensuring Washington remains a competitive place to build an enterprise.

Prominent figures weighed in heavily on structural reforms during these sessions. As highlighted by Kris Johnson of the Association of Washington Business, former Governor Gary Locke addressed the assembly, calling

“for more budget discipline in Olympia, warning against relying on overly optimistic revenue forecasts that lead to a cycle of budget deficits and pressure for higher taxes”.

Johnson noted that a similar message was previously delivered by former Governor Christine Gregoire during the AWB Spring Summit.

Additional summit participants echoed these core priorities, calling universally for sustainable public budgeting, a predictable and balanced tax environment, and the systematic streamlining of burdensome state regulations.

Concluding his analysis for the Chinook Observer and 425 Business, Kris Johnson of the Association of Washington Business reflected on the historical underpinnings of the state economy, stating:

“Washington’s economy has been built on a solid foundation of low-cost power, a competitive tax climate and our highly skilled workforce. That foundation took decades to build, and it’s now at risk — as the state’s new income tax and rising relocation interest make clear. We need a plan to preserve it and grow the economy for future generations”.

The Association of Washington Business has announced that a comprehensive report outlining specific policy actions and recommendations will be published this autumn.