Quarterly Economic and Revenue Forecasts
UPDATED: December 16, 2025
This quarterly forecast includes our analysis of current economic conditions and our objective projections of future revenue for state trust funds and their beneficiaries.
For Economic and Revenue Forecasts from 2013 and prior years, contact the Office of Budget and Economics by phone at 360-902-1730 or by email at obe@dnr.wa.gov.
Forecast Summary
Lumber and Log Prices
Between the beginning of 2023 and January 2025, lumber prices remained relatively stable and lower than the prior years, staying in between $370/mbf and $490/mbf (with one exception in December 2024, when it jumped above $500/mbf), with an average of $436/mbf1. However, in March and April, they increased substantially, to around $580/mbf. Through July, prices have fallen back to around $500/mbf.
Log prices generally follow the same trend as lumber prices, but the relationship is not one-to-one. From the beginning of 2023 to August 2025, log prices remained in a relatively narrow range - from around $610/mbf to $660/mbf. In September, they fell to just above $600/mbf. This is higher than most periods in the last 20 years in nominal terms, though not in real terms.
The outlook for both log and lumber prices is, on balance, that they will dip lower through most of 2026 before increasing slightly toward the end of the year.
As discussed at the end of this forecast summary, there have been multiple policies enacted or proposed that are likely affecting lumber and log prices. While policy uncertainty exists we expect there to be greater price uncertainty, particularly with lumber. Log prices are typically bounded on the low end because timberland owners can usually wait to harvest until prices get better, so we expect less movement in their prices.
Timber Sales Volume
The actual FY 25 timber sales volume was 444 mmbf (including both Westside and Eastside sales).
The sales volume forecast for FY 26 is held at 525 mmbf. This is higher than outlying forecast years due to the updated policy around timber sales containing complex forests, which released many prepared or partially-prepared contracts to go to auction.
Our understanding is that the plan for the policy around structurally complex forests will allow for timber harvests somewhere close to the status quo for the next decade, while alternative revenue streams are explored. Therefore, in outlying years through the end of the forecast period, forecast sales volume reverts to the long term mean.
Timber Sales Prices
DNR auctions timber primarily as stumpage - the right to harvest the standing timber. The difference between the delivered log price and DNR’s stumpage price can be thought of as equivalent to the sum of logging costs, hauling costs, and harvest profit.
The average price of timber sales in FY 25 was $408/mbf. This was much higher than forecast at the beginning of year, when expectations were relatively low because of the FY 24 average price. As the year progressed, prices were a little lower than expected through November. We expected high prices in the auctions from November 2024 through January 2025 — because they contained a substantial amount of high value timber from sales that had previously been held back — and then lower prices through the remainder of the years, February through June, because those months wouldn’t have the extra, higher value sales. However, the actual average prices post-November 2025 were by and large higher than expected, leading an increase in the FY 25 forecast in February and then again in June.
In September, the FY 26 sales price forecast was increased to $370/mbf from $340/mbf. This was largely because a number of sales that had been paused at the beginning of 2025 were approved for sale. These paused sales tended to be higher value.
This forecast, the FY 26 sales price is reduced to $360/mbf. Auction prices through the end of October have been far lower than expected. Typically, the July and August auctions are much lower than prices the rest of the year, but the September and October are close to the average for the year. While the size and composition of the those auctions may not necessarily be indicative of what we’re likely to see in the remainder of the year, the very low average price and the volume of no-bid sales give us pause. These lower average auction prices suggest that reported weakness in the timber market may be pulling down market prices. Prices are expected to soften through mid-2026
Outlying years’ prices are unchanged at the long-term average of $350/mbf.
Timber Removal Volume
Forecast harvest volume for FY 26 is reduced by 10 mmbf to 440 mmbf. This is likely too optimistic. Harvest volume in the first four months of the fiscal year essentially collapsed. On the westside, cumulative harvest volume through October is only 81 mmbf. This is well below the average of 139 mmbf, and is even 20 percent below the next lowest in 2024 of 105 mmbf. This is likely due to both a decrease in demand for logs —- numerous reports suggest that most mills have full log yards and are slowing down log buying — and incentives for private timber owners to pull forward harvests to avoid new forest practices rules around riparian zones, which will likely take effect sometime next year.
Timber Removal Prices
Forecast timber removal prices for FY 26 are decreased substantially for two reasons. First, harvests to-date have not only been low volume, but very low value as well. The average price of harvests through September was only $298/mbf. Second, the average price for volume expiring in FY 26, which must be harvested, is only $319/mbf. These, along with the expected harvests from the eastside, represent around 40 percent of the harvest volume forecast this year, pulling down the average harvest price.
For outlying years, the harvest price is reduced slightly due to the decreased forecast sales price.
Timber Revenue
The timber revenue forecast for FY 26 is decreased by nine percent, or $15 million, to $153 million. For outlying years the revenue is decreased slighlty.
Non-Timber Uplands Revenues
In addition to revenue from timber removals on state-managed lands, DNR generates sizable revenues from managing leases on other uplands. The overall forecast for non-timber uplands revenue is decreased. While the revenue to date has not seen a downturn, there are a number of issues that will have a detrimental impact on revenue this fiscal year with some having residual effects going into subsequent years as well.
-
Irrigated – auction results were not as high as expected, and the forecast is reduced by $0.3 million to reflect the unexpected decline in lease value.
-
Orchard and Vineyard – apple and wine grape markets have experienced a downturn in Washington. This is going to result in decreased revenue for DNR of approximately $0.5 million in lease payments going forward.
-
Commercial – some commercial properties have remained vacant for longer than expected and incurring higher management costs. This is projected to result in $0.5 million less in revenue for FY26 and FY27, with a recovery back up to normal revenues in the following years.
-
Minerals and Hydrocarbons – the price of aggregate has been higher than usual and DNR has had one of the best quarters on record. However, there is blast restriction that has been put into place that will restrict revenue for an unknown duration. It is not clear what the net impact of both of these factors will be for revenue at this point, so the forecast will remain unchanged. There will likely be more information to inform a forecast adjustment in the next quarter.
Aquatic Revenues
The forecast for water dependent rents is increased from $7.8 million to $8.1 million for FY26 and 2 percent increases projected for subsequent years. This reflects the overall increase in lease revenue generated in this category that is expected to continue going forward. There is also $0.15 million increase for aquaculture revenue for FY26 resulting from the unusually high prices observed in August.
The geoduck revenue forecast is unchanged but the uncertainty around the forecast remains high, even for geoduck.
From the beginning of 2023 to the third quarter of 2024 geoduck auctions had an average price of $11.60/lb, and, while there was still meaningful volatility, it stayed within a comparatively narrow range of $10.25/lb to $13.30/lb. That changed with the December 2024 auction, when prices dropped to $8.40/lb. At the time, it was unclear whether the cause of the price drop was arsenic issues on some tracts and/or the possibility of reciprocal tariffs with China. Washington’s geoduck industry is highly dependent on markets in China, so tariffs with China can have a major effect on the prices DNR receives2. Prices for the March 2025 auction were $8.60/lb, suggesting that there had indeed been a step change in the price level for geoduck. Prices for the June and September auctions, of $6.66 and $5.75, respectively, support that hypothesis.
Rapidly changing tariffs and the uncertainty it creates is particularly problematic for geoduck producers, because, unlike many other exporters, they have tight time bounds on their trading, little room for hedging activity and are required to pay their bid price. Geoduck harvest windows are typically about three months, often with shorter windows for individual tracts. Geoduck are generally sold live and typically are on a flight within 24 hours of harvest. This means geoduck harvesters have almost not capacity to adapt to tariffs. They cannot pull forward export quantity to avoid upcoming tariffs or delay shipment to hedge against sudden increases — they are contractually obligated to harvest their quota during the harvest window. Additionally, DNR has explicitly excluded tariffs as potential reason for relief from purchasers’ obligations to harvest geoduck.
Taken all together, this means that purchasers face substantial business risk from rapidly changing tariffs. Purchasers are committed to pay what they bid, which is based on a price they expect to get when they sell in China. A sudden change in the tariffs will change the prices that they are able to sell for, but it doesn’t change the amount that they pay or their obligation to harvest. This could put the business at risk. To take into account this risk, a rational business person would dramatically reduce the price that they are willing to pay for geoduck, to hedge against the potential losses associated with an increase in tariffs. This appears to be what we’ve seen in geoduck prices since December 2024.
In addition to tariff uncertainty, there have been repeated issues with arsenic levels. Several tracts have failed arsenic testing until after the geoduck auctions.
Because it appears that tariffs and tariff uncertainty are currently driving geoduck prices, some forecast around these are necessary to predict geoduck prices. Unfortunately, the question of when and how tariff’s will changes is a political one — which we are fairly ill-equipped to make.
The geoduck price model assumes that the added uncertainty from tariffs would continue until the mid-2026, that is, the whole of FY 26, and would have some residual effects through the end of calendar year 2027. The decision to carry forward this assumption from the September forecast was made prior to the October 30 announcement of a "truce" in the trade war between the U.S. and China. The assumption was predicated on the fact that there have been numerous new tariff announcements, escalations and subsequent implementation delays that drove uncertainty around the tariff regime.
Although there appears to be significant skepticism around whether the tariff truce will hold for the long term, it is likely that the relative stability it provides will increase prices, and therefore revenue.
Aside from tariffs, the geoduck market faces a number of risks that can cause prices to vary wildly. In addition to what is discussed above, these include
-
paralytic shellfish poison closures
-
tracts testing positive for high arsenic
-
weather issues - such as sewage contamination from flooding run-off
-
China’s economic performance overall
Total Revenues
The forecast revenue for the 2025-27 biennium is decreased by $18 million to $471 million.
Other notes to the Forecast
Since the beginning of the year, 2025 has seen a flurry of policy announcements, amendments, pauses, retractions, and reimpositions from the new presidential administration, as well as injunctions from the judiciary, that have increased uncertainty in the natural resources markets that DNR operates. Because things have been changing so rapidly, it has been difficult to parse which policy changes will actually affect DNR revenue.
It is unclear if and when these policy changes will stabilize. However, as noted in the geoduck discussion, the assumption for this forecast is that tariff uncertainty will remain until the end of 2026 and there will be residual effects after that. For revenue sources other than geoduck, we have not built-in any effects of the tariffs, because not only are the tariff levels uncertain, but their ultimate effects are uncertain. For instance, tariff’s on Canadian lumber — which supplies between 20 and 30 percent of softwood lumber used in the U.S.— could decrease supply, increasing lumber prices in the U.S. and leading to timber price increases. However, at the same time reciprocal tariffs are being placed by other countries on U.S. timber and lumber, decreasing export demand and leaving more for the domestic market — decreasing prices. Modelling done by CINTRAFOR after the announcement of the tariffs suggested there would only be very small changes to the wood products sector’s output.
Aside from the tariffs, earlier this year, executive orders were put forward to reduce U.S. import of timber products and increase supply of timber from federal lands - with a target to increase harvests from federal lands by around 25 percent. We are assuming that this will not result in a meaningful change in the supply of timber on the West Coast for two reasons. First, the current harvest volume from federal lands is very small — in 2024 harvests from federal lands was 121 mmbf out of the 2,444 mmbf total harvest, around five percent. A 25 percent increase from the 2024 harvest would be only 30 mmbf3. And second, a dramatically reduced workforce at the USFS would be hard-pressed to expand supply.
Finally, there has been renewed focus on immigration, with a campaign of "mass deportations". Pew Research has estimated that there were up to 1 million fewer unauthorized immigrants in the U.S. in June 2025, compared to January4. This is affecting both the construction and agriculture industries5. By one estimate, around 14 percent of the construction workforce are undocumented immigrants, and a large portion of the agricultural labor force are undocumented as well.
In the previous forecast, we noted that there had been reporting that the administration would pause raids on agriculture, hotels and restaurants6. However, it doesn’t appear that there’s been an actual change in policy7. Consequently, large scale deportations appear to be seriously limits labor supply for those industries.
While uncertainties around the policy environment persists, these forecasts will continue to be made based on the most likely scenarios, with a bias toward the status quo where there is significant uncertainty.
There are, as always, a number of other sources of uncertainty around DNR revenue specifically, and the overall economy more broadly. These include:
-
uncertainty about the type and quality of stumpage DNR is able to bring to market more than six months out; and
-
political tension with China directly affecting timber, agricultural products and geoduck exports and price.
Finally, climate change is a meaningful short- and long-term risk — as opposed to an amorphous risk in the far future — as previously rare extreme weather events become more common. In 2021, drought in Washington decreased wheat production on DNR lands by about 40 percent. In September and October 2021, extraordinary rainfall in British Columbia destroyed roads and railways, essentially halting timber harvests, lumber production, and timber exports through the Port of Vancouver. And in mid-June 2022, there was concurrently: massive flooding in Montana and Wyoming, thunderstorms that took out power-grids in the Great Lakes, and a record setting heat-wave that killed over 2,000 cattle in Kansas8.
Climate change will increasingly affect Washington’s fire seasons — drought and rising temperatures dry out fuels fast, leaving conditions ripe for wildfires to begin earlier in the year, burn longer, and spread more unpredictably than in the past. Although these haven’t seriously affected DNR timberland revenue since 2015, they pose a significant risk to both our short-term timber revenue forecast — potentially destroying standing timber under contract — and long-term revenue by destroying younger stands that would be harvested in future decades. Research suggests that the massive fires in Oregon around Labor Day 2020 caused not only immediate damage, but will reduce future Oregon harvests by 115 to 365 mmbf per year for the next 40 years. That, with the more immediate damage from the fires, suggests an overall economic impact of $5.9 billion on Oregon’s Forest Sector9.
-
The prices used here are for West Coast standard or better 2x4 Douglas-fir/Hemlock boards.
-
https://apnews.com/article/geoducks-china-us-tariffs-economy-849c8052fd0e679fa421c48d32ed1bc7
-
https://dor.wa.gov/taxes-rates/other-taxes/forest-tax/harvest-statistics
-
https://www.nytimes.com/2025/11/02/business/construction-tariffs-immigration-trump.html and https://www.king5.com/article/news/community/facing-race/washington-immigration/what-promise-mass-deportations-doing-immigrant-workforce-president-trump-ice/281-624dd7f8-8e23-4199-8f07-f738c883cd06
-
https://www.nytimes.com/2025/06/13/us/politics/trump-ice-raids-farms-hotels.html
-
https://www.washingtonpost.com/climate-environment/2022/06/16/summer-climate-disasters/
-
2020 Labor Day Fires: Economic Impacts to Oregon’s Forest Sector, Oregon Forest Resources Institute https://oregonforests.org/sites/default/files/2021-11/OFRI_FireStudySummaryReport_DIGITAL_0.pdf
Fiscal Year 2026
September 2025 | November 2025 | March 2025 | June 2025
Fiscal Year 2025
September 2024 | November 2024 | March 2025 | June 2025
Fiscal Year 2024
September 2023 | November 2023 | February 2024 | June 2024
Fiscal Year 2023
September 2022 | November 2022 | February 2023 | June 2023
Fiscal Year 2022
September 2021 | November 2021 | February 2022 | June 2022
Fiscal Year 2021
September 2020 | November 2020 | February 2021 | June 2021
Fiscal Year 2020
September 2019 | November 2019 | February 2020 | June 2020*
*Not completed due to COVID-19 pandemic.
Fiscal Year 2019
September 2018 | November 2018 | February 2019 | June 2019
Fiscal Year 2018
September 2017 | November 2017 | February 2018 | June 2018
Fiscal year 2017
September 2016 | November 2016 | February 2017 | June 2017
Fiscal Year 2016
September 2015 | November 2015 | February 2016 | June 2016
Fiscal Year 2015
September 2014 | November 2014 | March 2015 | June 2015
Fiscal Year 2014
September 2013 | November 2013 | February 2014 | June 2014
Office of Budget & Economics
1111 Washington St. SE
MS 47001
Olympia, WA 98504-7001
360-902-1730
Fax 360-902-1775
obe@dnr.wa.gov
-
https://www.washingtonpost.com/climate-environment/2022/06/16/summer-climate-disasters/
-
2020 Labor Day Fires: Economic Impacts to Oregon's Forest Sector, Oregon Forest Resources Institute ''https://oregonforests.org/node/840''
