DAY 2 OF BUDGET HEARINGS: State’s Fragile Economic Recovery is Slowing, State Economist Reports
September 21st, 2011
Tuesday at the Joint Legislative Budget Committee budget hearings, the committee heard from Dr. Darrin Webb, the State Economist from the Institutions of Higher Learning’s University Research Center.
He reported that while the state and nation are still technically in a recovery (not a recession), growth has slowed. Growth in the economy has especially deteriorated over the last six months, with employment falling in four of the last five months. Prominent economic forecasting analysts say the chance that the nation will see another recession in the near future is about 40 percent.
While the state is seeing slight economic growth, factors, such as employment numbers and the stagnation in consumer confidence, are making it “feel like” we are still in a recession. In Mississippi, jobs are still down by 69,000 from the peak in February 2008.
Average growth in state Growth Domestic Product (GDP) over the last 20 years in Mississippi, during periods of expansion, has been 2.7 percent. The growth for 2011 is expected to be a modest 0.7 percent, which is below the 1.5 percent growth expected for national growth. The state is not expected to meet the state’s 20-year average until at least 2014.
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Estimated State GDP Growth Compared to Mississippi Average Growth
All of these economic indicators (and more) will be taken into account as the State Economist and others prepare the Revenue Estimate that will serve as the basis for the creation of a balanced state budget for Fiscal Year (FY) 2013. By all accounts, FY 2013 is expected to be another lean budget year for the state as the fledgling recovery is slowing and federal stimulus funds have ended.
During the remainder of the budget hearings, we will likely hear how the cuts-only approach to the state’s revenue problem has threatened vital public services. A balanced approach that includes raising new revenue is required to maintain our investments in education, public safety, and workforce development that ensure our future economic growth.
Joint Legislative Budget Committee, Revenue Discussion, presentation from Dr. Darrin Webb, State Economist, September 20, 2011.