Expert: State’s Economy Likely Slipped Back Into Recession

By Emily Wagster Pettus/The Associated Press
JACKSON — State economist Darrin Webb says Mississippi probably slipped into recession between April and June during the 2nd quarter of 2012.

Because of weak jobs numbers and other factors, he expects it to remain there in the 3rd quarter, which ends this month. But he said it could improve in the final three months of the year.

“It appears the deterioration in the state’s economy goes beyond the employment sector,” Webb told members of the Joint Legislative Budget Committee on Monday.

He said Mississippi’s economy continues to struggle because of low levels of education, poor health and a high number of births outside marriage.

The budget committee meets this week to start planning for fiscal 2014, which begins July 1, 2013.

Because of the lackluster economy, lawmakers expect little budget growth overall.

The Department of Revenue is requesting a 43 percent increase in its part of the budget — a jump from the $58 million it’s getting this year to $83 million. Agency head Ed Morgan told lawmakers that the injection of cash would pay off, because the department would hire more workers to collect long-overdue taxes.

Lawmakers rarely grant such large increases, even when the economy is robust.

In Mississippi’s current budget year, which started two and a half months ago, state spending is only 0.4 percent higher than it was last year. The flat $5.5 billion budget is an improvement, though. Revenue had dropped slightly during the Great Recession that began in 2008.

Attorney General Jim Hood is requesting $9.6 million for his office in the coming year, up from the current $8.4 million. The attorney general’s budget has been reduced in recent years, and Democrat Hood said the proposed request is roughly equal to the budgets for fiscal 2009 and fiscal 2010.

This early in the budget process, legislative leaders don’t know how much money the state might have available to spend, and they’re noncommittal about how much money individual agencies receive. House Speaker Philip Gunn, R-Clinton, noted that the economy is flat and “there’s no quick recovery in sight.”

“We need to be cautious as we move forward,” Gunn said.

Webb, the state economist, said retail sales in Mississippi have been relatively flat in 2012 and unemployment claims have risen three of the past five months. He also said diesel consumption has fallen significantly, indicating fewer trucks are carrying goods in the state.

“Like the nation, Mississippi is not without a few bright spots,” Webb said. “The state is seeing modest improvement in the housing sector, and I am also encouraged by the fact that the recent declines in employment have not been as broadly based as they had in previous months. In other words, the July declines were fairly concentrated in a few sectors, and we had several sectors that actually gained in employment in the month of July.”

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