U.S. Set for Biggest State-Local Jobs Boost Since 2007
By Rich Miller and William Selway - Jan 7, 2013
State and local governments are in their best financial shape since the recession, giving them leeway to cushion the U.S. economy from federal budget cuts with spending and hiring of their own.
After slashing their workforces by about half a million in the past five years, state and local authorities will add employees in 2013, said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. Their payrolls in the fourth quarter will be 220,000 larger than in the same period for 2012, he projects.
Their expenditures and investment also will be higher, rising by 1.8 percent, triple the increase last year, according to projections by St. Louis-based Macroeconomic Advisers.
“The bloodletting on the state- and local-government level has finally passed through,” said Jim Diffley, chief U.S. regional economist for IHS Global Insight in Philadelphia. “They’re no longer subtracting from growth.”
The shift will help the U.S. weather the blow from federal tax increases and spending cuts, keeping the expansion on course, Zandi said. He forecasts that gross domestic product will climb 2.1 percent this year after rising 2.3 percent in 2012, with the expansion getting stronger as the year progresses.