This year’s House budget hearings got underway on an ominous note. A week and a half before Pennsylvania Governor Rendell’s budget address, the House Appropriations Committee held its first hearing on the 2010-2011 spending plan.
Economic expert James Diffley of the Global Insight Group gave a forecast for the coming year, and the news wasn’t pretty. He says unemployment numbers won’t go down this year.
"We think the unemployment rate will peak at 10.2 percent. It won’t be until the end of the year that we get below ten percent. The participation rate is at a record-low. The share of the adult population working, down to 64.6 percent. will likely stay above ten percent for most of 2010, and retail sales will grow by just 1.2 percent, after a 5.6 percent decrease in 2009."
Diffley expects 5.4 percent retail growth in 2011.
"When that happens by 2011 all we’ve done is recoup the losses in 2009. There’s been no growth in retail sales for three years. And that’s the budgetary problems – that’s the lag in budgetary problems that the states have. It takes two years just to get back to the level of tax revenue that you had to start with."
The Rendell Administration is predicting a 450 million dollar revenue shortfall this year.