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Adverse Impacts of State Fiscal Austerity

Adam S. Hersh

Economist, Center for American Progress

July 20, 2011

http://www.americanprogress.org/issues/2011/06/budget_cuts.html

The Economic Problem: Aggregate Demand Shortfall

Fiscal Policy and Economic Outcomes in the States

• 24 states have cut government spending by an average of 7.5 percent• 1 ppt increase in the unemployment rate• 2.1% loss of private employment• 2.9% real economic contraction relative to the national

economic trend.

• 25 states have expanded government outlays by an average of 11%. 0.2 ppt decrease in the unemployment rate 1.4% increase in private employment 0.5% real economic growth since the start of the recession.

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Spending Cuts Associated w/ Weaker Economies

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Spending Cuts Associated w/ Higher Unemployment

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Spending Cuts Associated w/ Private Sector Job Losses

americanprogress.orgamericanprogress.org

Adverse Impacts of State Fiscal Austerity

Adam S. Hersh

Economist, Center for American Progress

July 20, 2011

http://www.americanprogress.org/issues/2011/06/budget_cuts.html