Highlights of the budget forecast, from Tom Stinson, the state economist: Here’s the entire budget forecast.
The budget deficit over the next two years will be $4.57 billion. It’s lower than anticipated because of the stimulus. It would have been $6.5 billion. There will be a $236 million surplus in the current 2008-09 budget because of the stimulus package.
Another 70,000 jobs are going to be lost in Minnesota. 15,000 in construction, 30,000 in durable manufacturing. 15,000 in professional services. Only in health care will there be growth. “It could be worse,” says Stinson. He expects an unemployment rate of about 9.5%. The total number of lost jobs during the recession should be about 120,000.
Why are so many jobs being lost when the state has been approving record bonding bills. “It takes awhile for jobs to materialize under bonding bills,” according to Stinson. “We’ve had an enormous depression in the housing construction industry… it’s an enormous turnaround. You just can’t overcome that overnight.”
The president’s stimulus package will not turn the economy around.
This is a consumer-led economy. “We have to see an increase in consumer spending.” It’s 70 percent of the U.S. economy and “there’s no way the U.S. economy is going to grow until the consumer spends. Some of that reduced spending is because people are trying to rebuild their savings and retirement plans.
A sign of a turnaround would be a drop in the number of jobs lost nationwide. If the number of jobs lost nationwide is below 400,000 when they’re announced on Friday, that would “perversely be good news,” Stinson said.
The economy will start to grow in 2010-2011. There’s a 20 percent probability it won’t.
The jobs picture will brighten in the first quarter of 2010. It won’t be triggered by just one area.
The stimulus dollars may be hiding the long-term problem, but they’re helping in the short term.
There are signs that the credit market is improving.
Because of stimulus money, the governor’s proposal to cut adults with children from MinnesotaCare is now off the table.
I saw three Minnesota Public Radio reporters at the news conference. Expect a plethora of coverage on tonight’s All Things Considered broadcast.
Bob Collins