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Thursday, March 13, 2008

States Feeling the Recession

by Calculated Risk on 3/13/2008 05:31:00 PM

From Bloomberg: Corzine Says Revenue Drop May Force Steeper Cuts

New Jersey Governor Jon Corzine said growing home foreclosures and unemployment are cutting into state tax revenue and he may have to make deeper spending cuts than the $2.7 billion he proposed last month.
``It's real and we've seen a dramatic change in revenue at the state level,'' Corzine said today in Trenton during an address to mayors. ``This is not the time to raise spending. We need to have cuts.''
Corzine, in an interview later today on CNBC, said the U.S. economy may go into a worse recession than many expect because of a decline in consumer spending and higher costs for energy and food. He said port shipments have dropped 15 percent, the state lost 9,000 jobs in January and sales tax collections are dropping.
This same story is playing out at the state and local level all across the U.S. State governments are responding to the sudden shortfall in revenue by cutting spending, further weakening the economy.