“We are in the fragile aftermath of the Great Recession, where a return to normalcy seems like a mirage in the desert — the closer we get to it, the further it moves away,” said the State of Washington’s economist as quoted in an article in the New York Times today entitled “Warning by States as Tax Revenues Fail to Rebound.” (Read the full article here.)
For those who think the crisis of 2008 is over and that “the bailouts” made money or didn’t cost that much, need to read this article and the many like it every day. As the Washington State and other state economists well understand, the economy has not come close to recovering from the financial crisis-induced recession that continues to wreck state budgets just like it has ruined the federal budget. This isn’t just a numbers or tax and spend issue. Those budgets fund critical programs from education and police to food pantries and unemployment assistance – they are all being cut across the entire country.
Of course, state budgets are in such trouble because high unemployment, high foreclosures, dropping home values and related economic contractions were and are caused by lower tax revenue as a result of the financial crisis-induced recession. And, compounding the problems, the very reasons state budgets are in such trouble also increases the needs for the very programs that get cut due to lack of revenue.
It’s not likely things are going to get any better anytime soon. Frankly, all the news is bad. For example, NPR reported this morning that “The number of Americans who bought previously occupied homes fell in September. Home sales are on pace to match last year’s dismal figures — the worst in 13 years” and well “below the 6 million that economists say is consistent with a healthy housing market.” (Full story here.)
NPR also reported this morning that unemployment has not been “this high for this long since the Great Depression.” (Full story here.) That is going to get worse because the current economy can’t even generate enough jobs to accommodate new job market entrants, making it even more difficult for those already unemployed to find jobs. Demonstrating how big the unemployment crisis is right now: there are 4.6 job seekers for every 1 opening available, the highest since records were kept. (Full story here.)
Thus, the ongoing crisis of state budgets illustrates again that the costs of the crisis continue to eat away at all corners of our economy, eroding confidence as much hopes and dreams.