Mark Zandi: State Fiscal Outlook is "Dark"
Mark your calendars, everybody: Feb. 11, 2011. That's the day Moody's.com economist Mark Zandi says the economy will shift from financial recovery to a &...
Mark your calendars, everybody: Feb. 11, 2011. That's the day Moody's.com economist Mark Zandi says the economy will shift from financial recovery to a "self-sustaining expansion."
Zandi, who keynoted Governing's Outlook 2010 conference today, has a good track record with these things. When he spoke at last year's Outlook conference, he accurately predicted -- to the day! -- when the recession would end and economic recovery would begin (Sept. 15, 2009, for those of you keeping score.)
But while the economy may be in a period of recovery, and while it may be expanding a year from now, states and localities are (as my father used to say) still in for a world o' hurt. "The recession is over, but the recovery will be a bit of slog," Zandi said, calling the situation for state governments "dark."
Zandi praised the role that the government played in mitigating and ending the recession. "The end of the recession, in my view, is largely due to the policy response," he said. One of the most important policy elements, Zandi said, were the bank stress-tests conducted last spring. "That was a successful effort at reestablishing confidence. They were more than symbolic; they were substantive."
The other major policy element, of course, was the federal stimulus. "I don't think it's any accident that the recession ended at the same time the stimulus was delivering its maximum impact" in the states, he said. States and localities have certainly had a tough fiscal year, Zandi said, "but it would have been a complete mess without that stimulus money."
Whenever the economy does being expanding again -- be it 2/11/2011 or not -- states and municipalities still will have a long way to go before they're back in the black. Lagging unemployment and property taxes will continue to put pressure on public-sector revenues long after that. And once the financial house is somewhat in order, governments will have to turn their attentions to the persistent structural deficits they face.
Join the Discussion
After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.
The Week in Public Finance: Moody About Ratings, the Worst-Funded Pension and Data Disappointment3 days ago
Some States Call for Bigger Cuts in Greenhouse Gas Emissions3 days ago
Jeb Bush’s Medicaid Fix: More Choices, Fewer Benefits?3 days ago
Ex-Virginia Lawmaker Vows to Marry the Teenager He Got Pregnant (and Run for Senate)3 days ago
6 Baltimore Police Officers Indicted in Freddie Gray's Death3 days ago
Judge Legalizes Gay Marriage in Alabama, But Not Yet3 days ago