According to the latest survey from the Association of Washington Business (AWB), Washington employers report greater stability in their own businesses even as views of the state and national economy worsen and taxes and healthcare costs remain top concerns.
In the quarterly survey by AWB, the share of employers experiencing a downturn in their business fell from 27% a year ago to 21%, while those expecting job cuts dropped from 24% to 19%.
The largest share (42%) reported business is flat and 56% expect employee headcount to stay the same over the next six months. Tariff shocks are easing, with 61% reporting higher input costs, down from a peak of 77% in spring 2025, according to a news release from AWB.
Confidence in the broader economy, however, continues to decline.
Employers remain more favorable of the U.S. economy than the state economy, but their opinion of the national economy is also souring, according to the release.
The share that ranks the national economy as weak or very weak jumped from 20% a year ago to 32%, while those that rank the state economy as weak or very weak increased from 32% to 37%.
Two-thirds (67%) of employers cite the overall tax burden as the biggest challenge facing their business, followed by the cost of health care (63%) and government regulations (56%). Fifty-five percent report the cost of fuel as a key challenge, up from 46% last quarter.
The fall 2026 survey also found that:
• Recession fears have climbed slightly. Forty-one percent expect a recession in the next year, up from 36% last quarter.
• Relocation interest remains high, and some are already moving. Sixteen percent plan to move their business out of Washington, up from 10% a year ago, and 13% of those have already moved part of their business.
• Hiring is steadying. Twenty percent plan to add employees, up from 17% a year ago, and those planning cuts fell from 24% to 19%.
• Taxes and health care are top public policy priorities. Seventy-seven percent rank the overall tax burden as the most important public policy issue facing Washington state, followed by health care (43%) and homelessness (38%).
• AI is growing without costing jobs. AI use has more than tripled in two years to 27%, with 65% of employers expecting AI to have no impact on the number of people they employ. Twenty percent expect AI to increase jobs and 6% expect a decrease.
“It’s encouraging to see fewer employers expecting a decline in their businesses and more planning to hire,” AWB President Kris Johnson stated in the news release. “While employers are holding steady, they are growing pessimistic about the state and national economy amid higher taxes and rising costs across the board. Interest in relocating or expanding outside Washington remains notably higher than it was two years ago.
“Voters share similar concerns and overwhelmingly ranked the economy and affordability as their top issue in this year’s election. The upcoming legislative session will bring difficult conversations on taxes, health care and other issues. We hope lawmakers will listen to employers and voters by supporting a plan to grow the economy while bringing down costs for Washingtonians.”
Previous AWB surveys showed a jump in employers looking to exit the state primarily due to taxes. Relocation interest appears to have stabilized: 16% now plan to move out of the state, the same as last quarter, but higher than 10% a year ago. Employers remain twice as likely to say they plan to expand outside the state than within it (29% versus 13%), a gap that has widened over the past two years.
The Fall 2026 Washington Employers Survey report can be found online at https://tinyurl.com/yu3vaycr.
AWB conducts the Washington Employers Survey quarterly. The Fall 2026 survey is based on 416 responses collected by email from business owners and operators across Washington between Oct. 14 and Oct. 28, according to the news release.
