Financial Crisis Stops in US, Effects Still Felt Next Year

Added by Gary Dunn on December 2, 2010

The National Association of State Budget Officers (NASBO) and the National Governors Association (NGA) released a report on Wednesday in which they said that the financial crisis in the US has stopped, but that its impact on the economy will still be felt throughout 2011.

As the majority of the US states have begun on July 1 the fiscal 2011, forecasts have already been made by the two associations which indicated that fiscal stress will still be noticeable next year.

“After two of the most challenging years for state budgets, fiscal 2011 will present a slight improvement over fiscal 2010,” was stated in the report of the NGA and NASBO.

The financial crisis had a heavy impact on US states and was categorizes as being the longest and most deep recession ever since the Great Depression. The two associations said that because the credit market froze, tax revenue decreased and social services were requested by more people in need, the overall consequence was a total disaster for a couple of years.

“These back-to-back declines, only the second and third time that state general fund spending has declined in the history of this report, also mark the first time in which states have had consecutive years of lower general fund spending,” the associations said.

NASBO and NGA stated that US states were for to cut in both fiscal 2010 and 2009 the general fund spending.