Wednesday, Nov. 11 2009 @ 11:48AM
Celebrate the recession's end, if you like, but it's not over. Barack Obama's Recovery Act is softening the blow to state budgets, but that's only temporary. The shit continues to roll downhill from Wall Street to Main Street, as the Center for Budget and Policy Priorities points out (though not in those words) in "Additional Federal Fiscal Relief Needed to Help States Address Recession's Impact":
State and local spending plays an important role in the economy. The state and local sector is responsible for about one-eighth of GDP, so when states cut expenditures and raise taxes in an economic downturn, the overall economy feels the effect.
The revenue decline in this recession is unprecedented; it is the largest on record in the post-World War II period. State tax revenues have been declining since the fourth quarter of 2008. In the critical April-June quarter, when a major portion of state tax revenues are collected, revenues dropped 16.6 percent in 2009 compared to the previous year. The income tax was down 27.5 percent, and the sales tax was down 9.5 percent.
We're talking about nearly a million jobs still to be lost, on top of the current 10 percent jobless rate, which some think is on its way up to 12 or 13 percent.