Seattle’s October Economic Forecast Reveals a Mixed Outlook for Local Businesses

Seattle’s Office of Economic Revenue released their quarterly economic forecast, which presents a mixed picture for the city’s economy. While projected city revenues have improved, the regional economy continues to face significant headwinds including weak employment growth, a downturn in construction, declining trade-sector employment, and a cooling technology labor market. For Seattle’s small businesses and entrepreneurs, the forecast underscores the need for policies that support economic growth, strengthen neighborhood business districts, and make it easier to operate and grow a business in the city.

City revenues improve despite economic uncertainty

According to the City of Seattle’s Office of Economic and Revenue Forecasts, the October update projects approximately $8.8 million in additional revenue across 2026–2028 compared with the assumptions used in the proposed budget, excluding grants and fund balance transfers.

General Fund revenues are projected to reach approximately $2.10 billion in 2026, decline to $2.07 billion in 2027, and rise to $2.16 billion in 2028. Business and Occupation (B&O) tax revenue is also expected to grow, from $473.3 million in 2026 to $522.1 million in 2028.

However, stronger revenue projections do not necessarily indicate that Seattle’s broader economy is thriving. The city’s revenue outlook is supported by tax collections that have performed better than previously anticipated, even as several underlying economic indicators remain weak.

One notable area of concern is the real estate market. The forecast reduces projected Real Estate Excise Tax (REET) revenue by $19.5 million across 2026–2028, reflecting continued challenges in the real estate sector. Because this tax depends on property sales, its performance can signal changes in real estate activity and the broader local economy. The tax contributes to the budget of the Seattle Department of Transportation to fund projects like infrastructure improvements. Decreasing REET could result in changes to these services.

Employment and industry challenges persist

The regional labor market remains weaker than the national economy. The forecast anticipates limited employment growth in the near term, with total regional employment not expected to surpass pre-pandemic levels until 2028.

Several industries are contributing to this sluggish outlook. Construction continues to face a downturn amid weak demand for office space, elevated office vacancies, and high interest rates. Trade-sector employment has also declined, while technology employers continue to demonstrate limited demand for workers.

These trends matter beyond the industries directly affected. Employment growth supports consumer spending, which helps sustain neighborhood restaurants, retailers, service providers, and other small businesses. When hiring slows and workers face uncertainty, local businesses may also face challenges maintaining sales and planning for future investments.

What the forecast means for Seattle’s small businesses

For small businesses, the forecast highlights the importance of distinguishing between the city’s fiscal position and the financial health of its business community. Even when municipal revenues remain relatively stable, individual businesses can struggle with rising operating costs, uncertain consumer demand, and barriers to expansion.

These challenges are particularly relevant to LGBTQ+-owned businesses and other entrepreneurs who contribute to Seattle’s diverse economy. Independent businesses help create vibrant commercial districts, provide local jobs, and make neighborhoods more welcoming and economically resilient. Supporting these businesses is an investment in the broader community.

As Washington’s LGBTQ+ Chamber of Commerce, GSBA believes Seattle’s economic future depends on creating conditions in which businesses of all sizes can succeed. That includes reducing unnecessary barriers to doing business, addressing rising operating costs, supporting neighborhood commercial districts, and ensuring entrepreneurs can access the resources they need to start and grow their businesses.

Building a more resilient Seattle economy

As city leaders make budget and policy decisions for the coming years, the October forecast offers an important reminder: fiscal stability and a thriving local economy must go hand in hand.

GSBA will continue to encourage policymakers to keep small-business affordability, economic competitiveness, and inclusive growth at the center of their decisions. By investing in the businesses and commercial neighborhoods that make Seattle unique, the city can strengthen its economic foundation and build a more resilient future for businesses, workers, and residents alike.