GDP and Employment drag from State and Local Governments

A key policy issue for 2021 will be how much disaster relief the Federal government will provide to state and local governments. If we look back at the Great Recession, most of the damage was done to the States after the recession. This is because state and local governments are required to run a balanced budget (or something close), and the state governments started cutting after the recession. Here is a graph showing the contribution to percent change in GDP for residential investment and state and local governments since 2005. Click on graph for larger image. The red bars are the......(read more)

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