Decline since January '07 worst in nation
Nevada's economy has declined more than that of any other state since January 2007 and could get even worse as the national economic downturn becomes more severe, a report released Tuesday indicates.
The damage is just beginning for state government budgets, with further tax and payroll declines expected in coming months, according to the report by the Rockefeller Institute of Government.
"The last fiscal crisis for the states, which occurred in the midst of a mild recession, was dubbed the perfect storm. This one could be more perfect," co-author Donald Boyd said in the report, referring to the aftermath of the Sept. 11, 2001, terrorist attacks.
As if Nevadans intuitively did not already know, the Rockefeller Institute, a policy research organization at the State University of New York in Albany, found Nevada has been hit harder by the downturn than any other state.
According to the Federal Reserve Bank of Philadelphia, Nevada's economic activity index in August was 95.8, based on a January 2007 benchmark of 100, making it the worst in the nation.
Nevada's index also dropped further than any other state's between May and August, with its economic activity falling 2.1 percent.
Since May, 39 states have shown declines in economic activity, led by the 2.2 percent drop in Nevada.
Nevada's unemployment rate climbed to 7.1 percent in August, far above the national 6.1 percent average. It also is the highest unemployment rate in 23 years.
Last week, Nevada economists predicted unemployment would increase even more, to an 8.6 percent average rate in 2009 and 2010.
Gov. Jim Gibbons and the state Legislature have cut state spending by $1.2 billion because of declining tax revenues.
Gibbons warned legislators they might have to cut another 14 percent when they go into session in February.
"The inability of businesses and individuals to access capital has taken a serious toll on economic activity," he said. "People can't get loans to buy homes, and businesses cannot expand their businesses. This credit crunch is having a very serious effect on Nevada."
Assembly Speaker Barbara Buckley, D-Las Vegas, said Monday that because of further tax revenue declines, the state's budget cuts may approach 20 percent.
1 comment:
Not to make light of Nevada's plight, but I don't see how people could have referred to it in the past as "recession proof."
One of its primary draws was leisure. And until recently a second major activity was real estate development. It should have been obvious that each of those areas of economic activity were highly vulnerable to recessions.
What's recession proof is something that everyone needs, such as agriculture and energy.
Dave
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