Below is an interesting article on how the government is not doing what it normally does in a recession recovery. I am not educated enough to know exactly what it means, but it sure doesn't look positive. The crushing federal debt has to be a major factor in why the government isn't adding jobs to help the recovery along. Being always interested in numbers, and being unemployed going on 11 months, the longest by far in my career, the thought of another two years of recovery is disturbing. Being north of 55 years of age doesn't help either.
Usually a job engine, localities slow US economy
By PAUL WISEMAN, AP Economics Writer 3:26 a.m., June 6, 2011
WASHINGTON — In a healthy economic recovery, states and localities start hiring, expand services and help fuel the nation's growth. Then there's the 2011 recovery.
The U.S. economy is moving ahead, however fitfully. Yet state and local governments are still stuck in recession. Short of cash, they cut 30,000 jobs in May, the seventh straight month they've shed workers. Rather than add to U.S. economic growth, they're subtracting from it.
And ordinary Americans are feeling it - from reduced services to fewer teachers, police officers and firefighters.
The Great Recession officially ended two years ago this month. By the same point during previous recoveries, state and local governments were engines of growth: In the two years after the 1990-91 recession ended, for example, they'd added 430,000 jobs. At the same point after the 2001 recession ended, they had added 249,000.
This time is different. More than 467,000 state and local government jobs have vanished since the recession officially ended in June 2009, including 188,000 in schools.
Few see the pain subsiding soon. Mark Vitner, senior economist at Wells Fargo Securities, expects state and local governments to slash 20,000 to 30,000 jobs a month through the middle of 2012. Joel Naroff of Naroff Economic Advisors notes that when states cut spending to balance their budgets, as required annually, a ripple effect multiplies the damage: Companies that do business with states and localities suffer. These companies, in turn, scale back their own hiring.
"There's a whole slew of private companies that have to cut back when they don't get the (government) contracts they had been getting," Naroff said. "You can't balance a budget and say everything's going to be beautiful."
Moody's Analytics estimates that each job in state and local government supports an additional 1.3 jobs elsewhere in the economy.......
The Great Recession of 2007-2009, the longest and deepest downturn since the 1930s, dried up state and local tax revenue. It also escalated demands for social programs like Medicaid and unemployment benefits and "ate through their rainy-day funds," notes Michael Gapen, senior U.S. economist at Barclays Capital.
For a while, federal stimulus spending cushioned the blow to state and local finances. But that money is running out. And it probably won't be replenished. The federal government is preparing to cut its own spending to shrink huge budget deficits.......
But 29 states say they'll still spend less in the 2012 fiscal year than in 2008. And local governments are still waiting for a recovery in tax revenue. They rely heavily on property tax revenue, which continues to sink with the collapse in home prices in many areas.
"The state revenues are coming back, but the local revenues probably haven't seen the worst of it," says Christopher Hoene, director of research at the National League of Cities. "We still have another year to go for sure."
