I think this year will be worse than last, because it will be more local. States have been balancing budgets on the stimulus funds, and many have made only half-hearted attempts to reduce costs.
The way overboard spending habits of local and state governments will have to be broken, not funded. There is a reason tax revenues are down so much, and they need to adjust accordingly. Of course, government worker layoffs have much the same impact on unemployment and local commerce as any other layoffs.
I had an actuary show me that if California's expenses had been adjusted for the cost of living, and any population changes, they'd have a surplus now equal to what their deficit is.
It should also be noted that all of the warnings of big box stores and contracting for help with no benefits is also coming home to roost. It would be a brave soul indeed that took over a lease for retail space right now.
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