Thursday, January 22, 2009
The Economy Is Going to Get Bad - No duh
At last years town hall meeting I too had painted a grim picture yet all school warrants passed. Maybe Croydon residents did not believe we were going to have four dollar gasoline last summer. Will the educrats fill town hall again and pass tax warrant increases this year? I am sure a certain someone will be by the phone to call people in if a warrant has any chance of failing.
Okay if housing prices went down why did our assessment go up? In reality our assessment should not have gone up as no home has sold in our development since we purchased our property in November of 2006.
Boy do I sound a little cranky today?
The following AP piece appeared on MSNBC.
Economists paint grim picture for NH, region
By NORMA LOVE
updated 5:55 p.m. ET, Wed., Jan. 21, 2009
CONCORD, N.H. - One by one a parade of economists — apologetic for bearing bad tidings — painted a grim picture for New Hampshire and the region lasting into next year.
"I've got binoculars on trying to see the light at the end of this housing market tunnel," Russ Thibeault, president of Applied Economic Research in Laconia, told lawmakers Wednesday.
As he left, Thibeault summed up for the others: "Good luck. It's going to be a tough couple of years."
The House budget and tax writing committees had asked the economists to offer their outlooks and any solutions to the state's budget crisis. Dennis Delay of the New Hampshire Center for Public Policy Studies suggested the revenue shortfall — if nothing changes — could be $500 million over the life of the budget for the two years beginning July 1.
"I don't really know where revenues are going to be in 2010 and 2011," he began before offering his qualified assessment.
Ross Gittell, a professor at the University of New Hampshire and forecast manager for New England Economic Partnership, offered a bit of cheer. New Hampshire's jobless rate is expected to remain below the national rate even if the state rate hits 7.4 percent as projected.
"We're going to come out of this relatively strong," he said.
But Gittell and the others also cautioned that the recovery will be very slow.
Gittell estimated New Hampshire will lose 16,000 jobs due to the recession and though hiring will win out over layoffs by the end of next year, the state won't recover all the jobs it loses until 2012.
Gittell said the forecast is for New Hampshire's housing prices to drop 23 percent before a slow recovery.
Economists say the current recession is similar to one New Hampshire experienced in 1990. Thibeault said it took nine years for home prices to reach the prices they were in 1989 after they dropped in the 1990 recession and a similar, slow recovery is likely with this recession.
"It's a steep drop and it's going to be a gradual recovery," he said. "Hopefully we will bottom out in 2009."
Buyers aren't getting into the market despite low interest rates because they're afraid they'll be laid off, Thibeault said.
"It really is confidence in jobs, confidence in the economy that are the missing ingredients," he said.
He said he's hopeful federal incentives will help stabilize the market by the end of this year.
Shawn Warren of auditing firm KPMG said other states are doing everything from not paying bills to tapping rainy day savings accounts to deal with budget shortfalls from declining revenues.
Warren said short-term fixes may take care of immediate budget problems without resolving the underlying problems. For example, across-the-board cuts may appear attractive, but would exempt fixed spending that can't be cut — such as debt payments — and lead to deeper cuts in other areas of government without examining whether the right cuts were made.
Warren said the same applies to layoffs since government needs the right people in place to be effective.
"It is not a sustainable way to balance a budget in the long-run," he said.
He also cautioned against selling state assets to plug ongoing spending holes. Once the cash is gone, the state no longer has the asset and still has the spending problem, he said.
Copyright 2009 The Associated Press. All rights reserved.
Thought of the Day - I am not really a fashion maven I am all for comfort and I have not been a fan of Bush as of late, but you have to give him credit for respecting the office. A major Bush rule gets scrapped by Obama.