Governments Expected to Issue More Debt for Infrastructure Projects
GFOA Newsletter January 29, 2015
As the economy expands at its fastest pace in more than a decade, state and local governments are once again issuing debt. “After a budget-cutting push led governments to pay off debt by the most on record, the $3.6 trillion municipal bond market may grow this year for the first time since 2010 because of borrowing for construction projects,” Bloomberg reports. State and local governments are expected to sell $357.5 billion in debt this year, an increase of $9.4 billion from 2014. “America’s governments would need to spend about $3.6 trillion through 2020 to put everything from roads and water to sewers and electricity networks into adequate shape,” according to the article.
State, Local Government Employment Outlook Cloudy
GFOA Newsletter January 15, 2015
The latest jobs report showed relatively strong growth in private-sector employment, but state and local government employment remains lower than the levels reported in December 2007, according to a January 12 Rockefeller Institute of Government data alert. Total U.S. non-farm employment grew by 252,000 jobs in December 2014, compared to November, the Bureau of Labor Statistics reported, but state government employment gained only 7,000 jobs, and local government, just 4,000. According to the institute’s analysis, total non-farm employment rose by 1.4%, or 2 million jobs, since the start of the Great Recession in December 2007, with private-sector employment growing by 2.1% (2.4 million jobs). While private-sector employment has improved substantially, state and local government employment remains below prerecession levels: Employment is down by 1.1% (-54,000 jobs) for state government and by 2.3% (-340,000 jobs) for local government. “State and local government employment is far weaker seven years after the start of the Great Recession than it was seven years after the start of any of the previous four recessions. On average, state and local government employment was up 8.1% seven years after the start of the previous four recessions.” In other words, despite the good news for private sector jobs, the employment outlook remains cloudy for the state and local government sector. As the data alert says, “The Great Recession led to deep cuts in state and local government jobs – much deeper than any other recession in the last five decades.”
County Employment Picture also Gray. According to the National Association of Counties, unemployment has yet to return to pre-recession lows in most county economies. According to the NACO study, economic recovery is starting to spread, but only 65 county economies have fully recovered. Net job creation was greater in 2014 than the previous year, however, with 40% of the new jobs in industries earning more than the average county pay. But at the same time, average county pay in half of county economies declined between 2012 and 2013.
In Nationwide Economy, Jobs Improve but Wages Drop. Although the overall U.S. economy appears to be at its best since 2008, including the job market, wages are not increasing. Total employment rose by 2.95 million for the year, the largest advance since 1999, and the unemployment rate also improved, edging down in December to 5.6% from 5.8% in November. The rate fell by approximately one percentage point between 2013 and 2014, the largest decline since 1984. But average hourly earnings also fell last month. “This is still a buyer’s market in terms of labor,” according to the New York Times
Looking Up: GDP Hits 5% in 3rd Quarter
January 8, 2015
U.S. gross domestic product grew an annualized 5% in the third quarter, raising hope that the economic recovery is picking up momentum, according to the Washington Post. The expansion, which is 1.1 percentage point better than the government’s previous estimate, marks the fastest quarterly growth rate since 2003. But we shouldn’t necessarily expect smooth sailing in 2015, according to Fortune: “The economy is certainly better than it was just a year ago. But does it really feel 5% good? So far this year, the U.S. labor market has created an average of 240,000 jobs a month. That’s impressive, but it’s not 5% impressive. An economy growing consistently at 5% would be creating more like 575,000 jobs a month. We are a considerable distance away from that.” A major contributor to the third quarter GDP growth figure was business from abroad, the Fortune article reports. “A smaller trade deficit—more exports and fewer imports—added 0.8 percentage points to GDP in the third quarter, or nearly 20% of the growth. It’s hard to believe the U.S.’s good trade news will continue, especially once we get into 2015.”