|7/7/2009 - Jackson, Miss.
The June issue of the Mississippi Economic Review and Outlook, published by the Center for Policy Research and Planning of the Institutions of Higher Learning (IHL), is now available online at www.mississippi.edu/URC. This issue focuses on the rising unemployment in the state and the projected course of the recession. In addition to articles on the economic outlook, the issue includes an article addressing whether the time has come to reform the state unemployment insurance system: currently, most of the unemployed do not receive benefits, either here or nationally.
Mississippi Economic Forecast. Job loss is widespread across the state, falling tax revenues have triggered budget cuts, and consumers are slashing spending in response to drops in their income and net worth. The unemployment rate is rising and will continue to increase until next spring, when it will peak at about 11 percent. Manufacturing has been the sector hit hardest, with a 10 percent drop in payrolls, but construction, finance, and business and professional activities have also suffered jobs losses of 5 percent or more.
"This recession is placing a severe burden on many families," states senior economist Dr. Marianne Hill, who prepares the state economic forecast. "While the stimulus package is preventing an even deeper plunge in economic activity, we are not out of the woods yet." Stimulus spending in the state is supporting Medicaid, education, and a wide range of activities, as detailed in this article. The turnaround in the state economy is forecast for mid-2010, in line with national trends. Employment is not forecast to return to 2000 levels until 2014, however, due to the slow pace predicted for the recovery.
National Economic Outlook. There are signs that the housing market will hit bottom this year, but nonresidential construction is predicted to continue its plunge well into 2010. The financial crisis is not over, and measures taken to stabilize the banking sector and boost spending are resulting in a soaring federal debt that worries analysts.
The good news is that the financial crisis appears to be contained, and the $787 billion stimulus package is offsetting some of the drop in expenditures. The recovery will be slow, as households recover from a 22 percent fall in their net worth and major firms in the financial and auto industries undergo restructuring. National output is expected to turn up later this year, but the unemployment rate is forecast to continue rising, peaking in 2010 at over 10 percent. With the global economy in recession, U.S. exports will not be a strong contributor to growth.
Mississippi's Unemployment Insurance: Is Change Needed? Most unemployed workers in the state do not receive any unemployment benefits, despite having held jobs subject to state unemployment insurance taxes. The same is true nationwide, and modernization of the nation's unemployment insurance system is one of the goals of the American Recovery and Reinvestment Act (ARRA). States that change the base period used to calculate benefits, or agree to a new formula to determine extended benefits, or make other specified changes will qualify to receive federal funds to cover any associated increase in benefit payments for two to three years. Should Mississippi adopt some of these changes? Dr. Marianne Hill examines this question.
For more information, contact Dr. Marianne Hill, senior economist, at 601-432-6376. The full text of the Mississippi Economic Review and Outlook is available at www.mississippi.edu/URC.