Perhaps it is no surprise, but now Mississippi has the numbers that indicate just how much worse this year’s shutdown has been compared to the Great Recession of 2008 and 2009.
State economist Darren Webb and revenue commissioner Herb Frierson spoke to the Senate Finance Committee last week. They didn’t have much good news to report.
Webb said state unemployment jumped from 5% in March to 15% in April, and he expects it to peak later this year at 20%. The jobless count never came close to that in 2008, although May’s figures, which will be released in early June, may move toward that 20% mark.
Webb also said that a decade ago, Mississippi lost 78,000 jobs during the two-year recession. A larger number of jobs already has been lost this year. The state’s gross domestic product, meaning the value of all its goods and services, has declined by nearly 12% over the past six months. That is triple the decline of 2008-09.
Tax receipts have naturally followed this lead. Frierson reported that with a week to go in May, this month’s state tax receipts were down $45 million from a year ago. More than a third of that was a decline in sales taxes, which are $16 million below estimates.
There’s no way to sugarcoat these numbers, and state officials should not even try. Everyone knew upfront there would be a cost to shutting down much of the economy in an attempt to slow the spread of the coronavirus; these numbers just explain how much it cost, both in terms of employment and tax receipts.
The ultimate question, to be answered in the coming months, is whether the shutdown saved lives and prevented more serious infections.
If there is good news, it’s that Frierson said the state should have enough money to get through the current fiscal year, which ends June 30, because it took in more than expected from July through February.
Surprisingly, he said the state may not need to dig into its $679 million rainy-day fund for the current year. That’s a good thing, because it’s obvious that next year’s revenue is going to be way down. How far down, and how long the decline will last, are the unknowable questions during what is still the early part of this virus period.
Webb does not expect a quick recovery. He told the Senate committee Tuesday that the state may not return to its pre-virus employment and tax receipt numbers until 2023.
If he is correct, we are two months into a three-year period of personal, business and government difficulty. It would be easy to argue that Webb is overestimating the recovery period, but the wrenching changes forced on the economy by the virus and its stepchildren of masks, social distancing and sheltering in place make it more likely that recovery will take time.
Once again, it’s no fun to be in charge of state government. Republicans were all set to give teachers a pay raise and loosen other purse strings. It’s hard to envision lawmakers doing that now, when so much about the coming year is unclear. Such promises will have to keep until we know how bad this downturn will be.