Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for the ‘State & local government’ Category

The American economy: Unmired at last

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America’s recovery is neither robust nor dramatic. But it is real

Mar 17th 2012 | WASHINGTON, DC | from the print edition

[Greg Ip] SINCE Florida’s property market collapsed and its economy tanked, Hillsborough County has endured almost nonstop austerity. In the past five years the government of the county, halfway up the state’s Gulf coast, has eliminated a quarter of its 6,000 positions through attrition and lay-offs. It has scaled back after-school child care. Workers’ pay has been frozen for three years.

But the fiscal year that begins in October holds the prospect of relief. Property-tax revenue is declining more slowly. Tourism-related taxes have stabilised. Sales-tax revenue is actually up. There is still a deficit to be eliminated, but it is a third of the size it was a year ago; the county thinks it will need no lay-offs next year. Things aren’t getting better, says Tom Fesler, the county’s budget director. “It’s more a function of just not getting worse.”

Such faint praise is not as damning as it seems; there has been an awful lot of worse in the past few years. America’s recovery may have officially begun in mid-2009, but it has bogged down repeatedly since. That has in part been due to circumstances beyond American control, such as rising oil prices and Europe’s debt crisis. But it has also been due to the hangover of the recession: consumers have been shedding debt, lenders have been reluctant, housing markets have been moribund, and state and local governments like Mr Fesler’s have been cutting budgets in the face of prohibitions on deficits.

Some of those impediments have now gone away. Read the rest of this entry »


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March 15, 2012 at 1:40 pm

The economy: It’s all up to the Fed

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The Fed will try to force the economy into orbit with more bond purchases

Oct 14th 2010 | Washington, dc

[Greg Ip] ROCKET science may be out of fashion on Wall Street, but it still has a following at the Federal Reserve. All year long officials there have looked for signs that the economy has reached “escape velocity”: growth that is strong enough to bring down unemployment once the propellants of government stimulus and inventory replenishment are spent.

Such signs remain maddeningly elusive.

The entire  article is linked here.

Written by gregip

October 14, 2010 at 3:22 pm

Public finances: Can pay, won’t pay

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America’s most profligate states do not owe as much, proportionately, as Greece. But their politics are just as problematic

Jun 17th 2010 | WASHINGTON, DC

[Greg Ip] THE state of Illinois has a rather crude way of coping with its ballooning budget deficit. It stops paying bills. Already, it has failed to pay more than $5 billion-worth. State legislators are paying their own office rent to avoid eviction. Schools and public universities are having their budgets cut.

Illinois owes Shore Community Services, a non-profit agency in suburban Chicago, some $1.6m for services to the mentally disabled. The agency has had to lay off a dozen staff. Jerry Gulley, the executive director, says his outfit’s line of credit could be exhausted soon. The bank will not accept the state’s IOUs as collateral. “That’s how sad it is,” shrugs Mr Gulley.

Comparisons between incontinent American states and Greece are all the rage. Read the rest of this entry »

Written by gregip

June 17, 2010 at 3:00 pm

America’s municipal-bond market: State of pay

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Dec 10th 2009 | WASHINGTON, DC
From The Economist print edition

A federal subsidy may change the market for good



[Greg Ip] THE federal government may have astronomical deficits but it can still borrow with ease at rock-bottom rates. Not so states, municipal governments and other government agencies, such as school districts and public-transport bodies, which have historically borrowed at lower rates than the Treasury. That is because interest on municipal bonds is generally tax-exempt. Investors accept a lower yield on a muni-bond than on a comparable Treasury bond on which they pay tax.

Thanks to the financial crisis, however, that position has changed: municipal yields are much closer to and, in some cases, above those on Treasuries (see chart). Some borrowers have scaled back or shelved planned borrowing. Read the rest of this entry »

Written by gregip

December 10, 2009 at 8:00 pm