The Independent Fiscal Office is that curious creature intended to be the state’s source of a-political economic and budgetary analysis. Its first report came due this month. To celebrate, and get some help reading the economic trends, the IFO held a conference featuring outside economic experts.
They did not come bearing great news.
“Well, virtually no one is growing,” said Joel Platt, a regional analyst with the U.S. Department of Commerce, in reference to the third quarter of last year. “2011 is very anemic growth in personal income, and while the U.S. is growing at 0.14 percent, Pennsylvania is growing at 0.08 percent. Uh, virtually there’s no growth, uh, anywhere.”
For Matthew Knittel, the IFO’s director, the question is: has the state moved past that end-of-year period of weakness?
He said it appears so – the third-quarter poor showing was due to state and local government layoffs, which appear to have stopped.
“The most recent data that we see now going through December suggests that the layoffs at the state and local level have abated,” said Knittel. “So we think they’ve stopped hemorrhaging jobs.”
But that’s in the past, now. The IFO’s first report is a forecast, and it estimates moderate economic growth over the next five years in Pennsylvania, with a jobs picture slightly rosier than that of the country as a whole.
It’s that jobs forecast that visiting experts lingered on for their economic pick-me-up.
“I’m getting to the point where I actually say good things, so it’s making me happy,” said Jason Novak, an analyst with the Federal Reserve Bank of Philadelphia during his presentation. His glee anticipated a slide he had made up to show unemployment decline in parts of the state where Marcellus Shale natural gas drilling has taken off. Novak and other economists stressed it’s the sectors supporting the drilling industry that are growing, such as health care, road construction, and housing.
Knittel said Pennsylvania’s health care sector is among the largest in the country is showing job growth – and those positions could multiply. Pennsylvania’s elderly population is growing, which could cause public welfare spending to increase.
“It depends on how the commonwealth respond to it,” said Knittel. “The revenues drive the expenditures, so we’re not sure. Our job here was to present the situation left unchanged, if we took our policy from 2011-12 forward, what does the fiscal situation look like?”
The IFO was created in 2010 and funded for the first time in last year’s budget. It’s not yet fully staffed. Knittel said the office will release revenue estimates in May, and a final projection in June.
