With Economic Uncertainty, Analyst Suggests Savings and Recovery Planning
Maryland lawmakers should consider limiting recurring spending and investing in programs to aid in an economic recovery, an economist said Tuesday.
Dan White, director of government consulting and public finance research at Moody’s Analytics, told the Senate Budget and Taxation Committee that a recession is likely during the 2021 fiscal year that lawmakers are currently budgeting for.
“There is still an uncomfortably high risk that we’ll have an economic slowdown if not a full-blown recession by the end of this fiscal year that you are budgeting for,” White told the committee. “…It’s not definite, but it would certainly be extraordinary if we did not have a recession or downturn before June of 2021.”
White told committee members that the U.S. economy has been growing for 11 years, the longest expansion in history. In the short term, he expects that growth will continue, but slow.
More states than ever are prepared to respond to a recession, White said. On a state-by-state stress test, Maryland rates in about the middle of the pack when it comes to preparedness for an economic downturn, he said.
The state could do more by investing greater amounts in savings and focusing now on how to recover if a recession hits, White said.
“…So making sure that there’s not too much going in to recurring funding that would have to be clawed back during a recession and making sure that you’re investing in things that would help you during that next recovery like infrastructure, workforce development,” he said.
While White stressed a high level of risk in today’s economy and warning signs that a recession could be in the offing, he also gave the committee the same warnings last year and said a downturn may very well not come to fruition in the 2021 fiscal year as well.
“The one thing that we as economists can tell you about the next recession is that there will be one,” White said.