Leading North Country industry, state and local government, in decline
The GDP numbers that came out last Friday were generally trumpeted for their positive growth numbers, building on last quarter’s boost.
Real gross domestic product — the output of goods and services produced by labor and property
located in the United States — increased at an annual rate of 3.2 percent in the first quarter of 2010,
(that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by
the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 5.6 percent.
Buried within those numbers are some even more positive signs for America’s economy, and some troubling indicators for the North Country.
It turns out the nation’s state and local government sector declined by a whopping 3.8 percent. That builds on a decline in the last quarter of 2.2 percent.
In six of the last nine quarters — since the beginning of 2008 — state and local governments have shrunk, spending less money on everything from salaries to goods and services.
That’s good news for conservatives, who want to see the private sector moving ahead of public spending.
But it means tough going for region’s like the North Country, where most of the high-paying high-benefits jobs are provided by governments.
A case of “be careful what you wish for”?
It’s not just a question of cutting spending, it’s where and what and why it’s being cut. If the reason is because revenue is down but the politicians in charge would prefer to be at the old limits then nothing has been accomplished. If it’s because someone realized a particular program wasn’t fulfilling it’s purpose or could be better served by another program, agency or the private sector, well, that’s a horse of a different color as the munchkin said.
I would also be interested in knowing how much local governmental spending has been affected and in what areas for what reasons. Just saying spending is down really says nothing.
Harold brings up a good point- why, where and how was the spending reduced? If it’s not due to a more efficient or smaller gov’t then I question the premise of Brians claim it will make conservative happy.
There is a more immediate impact on the economy of the North Country and the entire state. That is the governor’s ill-conceived threat to furlough state state employees for one day each week until the budget passes. With salaries reduced by 20%, the tax base will shrink and these employees will be spending less money. This will have a significant impact on the businesses who depend on spending by government employees resulting in an exacerbation of the recession.
In addition, this, in combination with the withholding of raises negotiated and agreed to in good faith represents a breach of contract which will surely be challenged in court by the Public Employee Unions. This will incur legal expenses for the state which may result in more money being spent than saved.