My CHART OF THE MOMENT shows municipal and state expenditures were a net drag on gross domestic product for the past two quarters, subtracting 0.40 percentage point in the three months ended in June and 0.3 percent in Q3 – that’s the biggest drag we’ve seen since the stealth recession back in 2011/2012
One considerable drag on national GDP growth is when state and local government curtail spending because of their own loss of tax revenue
- Moody’s Analytics in September estimated that states and local governments face combined shortfalls of $450 billion through fiscal 2022
- Across the country, about two-thirds of cities reported delaying or canceling infrastructure and capital spending since the coronavirus drove the nation into a recession, according to a survey by the National League of Cities.
- At least $9 billion of construction work on transportation projects has been shelved so far, according to the American Road & Transportation Builders Association.