Oregon Public Broadcasting

Washington Governor Chris Gregoire says the economy may be stabilizing. But she warned the state is not yet out of the woods. Correspondent Austin Jenkins reports.

Gregoire says she's pleased to see an uptick in sales of homes priced under $350,000. It could be one sign of economic recovery. But retail, automobile and major appliance sales are still in the tank.

In fact Washington's new economic update finds the state is experiencing a summer economic lull.

Gregoire says the banking industry continues to be a key area of concern.

Chris Gregoire: “We're worried now about whether we can sustain the decline in the commercial real estate area – particularly for our community banks. They weren't hit with the home loans, they are being hit with the commercial real estate and that obviously is struggling right now.”

Gregoire says the September tax revenue forecast will be a telling moment. If things get much worse, Washington lawmakers will have to make further cuts to the state budget when they come back in January.