Hot off the presses (or web site, in this case), as of 2 p.m. today, the state’s October 2008 economic update is out!
The good news: Fiscal Year 2009 revenues are still holding slightly above what was predicted – up over $100 million. Income tax collections were better than expected, though sales tax receipts were worse than expected.
The bad news: For the next budget biennium of FY 2010-11, our economic outlook continues to worsen. Here’s a phrase you don’t want to see in your state’s economic update: “Unless conditions in financial markets change dramatically for the better, however, this recession will be the most severe faced by U.S. residents in the past 25 years.” [emphasis added] Remember back just seven months ago, in February when we got our last economic forecast? Then, the forecast predicted real GDP would grow 2.2% in 2009. Now the same forecasters are estimating GDP growth at 0.2%. That’s a major downward revision, which may very well result in less revenues (and a larger budget deficit).
Again, this is a quarterly economic update, just four pages long. Hang on until December 4th, when November forecast is scheduled to be released. That’s when we’ll learn more about how big the deficit for the next budget biennium could be.
This news today is sure to be of interest to Minnesotans. The economy and jobs are the #1 worry for two-thirds of Minnesotans, according to a new poll reported by MPR.