State economist Arun Raha and his staff at the Economic and Revenue Forecast Council have been signaling this for the last two months as state revenue collections have soured. But seeing it in black and white makes it clear that the next quarterly forecast will add to the state’s budget problems.
The preliminary forecast is reviewed by the Governor’s Council of Economic Advisors on Sept. 2 and both reports go into the actual forecast of revenue that will be presented September 15 to the state revenue forecasting council made up of legislators and the governor’s budget director and revenue director. But while the report directly effects state revenue, it also predicts general economic conditions that will be felt by everyone in the state.
Here are the key paragraphs:
“At the time of the June revenue forecast, the state and national economies were experiencing a slowdown after moderately strong growth in the spring,” today’s report says. “The forecast assumed the slowdown would continue through June, with improvement beginning in July and then accelerating. Our guarded optimism about the second half prospects of the national economy has given way to pessimism.”
“The national economic outlook has weakened significantly since our last forecast. Instead of growth momentum in the first half of the year, restrained by temporary factors, data revisions show an U.S. economy on the verge of stalling.”
“Consumer confidence is in the tank. The risk of the national economy slipping back into recession has increased significantly.”
Not only was the Great Recession deeper than previously estimated, Raha and his staff are revising downward the key factors in the state economy – personal income growth, job growth and housing construction.”
Here’s a pdf of Raha’s preliminary forecast. Make sure you’re sitting down when you read it.