In the last recessions, states across the country found themselves borrowing billions of dollars to continue writing unemployment checks. State unemployment trust funds, which held total reserves of only $9.5 billion in 2010 are strengthening with almost $55 billion dollars in reserve last year. All the states have repaid the entirety of debt owed to the federal government. Although this is an improvement, it seems that many states, including New York, California, and Texas, have missed a major opportunity to rebuild their funding during the recent good economic times. Economists and policy experts have said that the federal government "may not be in a strong position to help the next time the U.S. economy goes south, because federal budget deficits are approaching $1 trillion. Now states are looking to modify terms of unemployment benefits. North Carolina along with 8 other states has reduced the duration of benefits to only 26 weeks. As we hang around the 10 year business cycle correction mark, it will be interesting to see whether or not States will take more aggressive measures to prepare for a recession. Currently, states are not doing an adequate job addressing the issue.
https://www.wsj.com/articles/a-downturn-that-costs-jobs-could-catch-the-u-s-unprepared-1524424830
2 comments:
It would be interesting to see how the change in unemployment benefits would have on the overall labor force, like increased labor unions and strikes to negotiate on better overall perks/benefits. And I agree with you on whether the United States would go into a recession, because the economy has overheated and has almost hit its peak in the business cycle.
I wonder if the states not preparing for a recession has to do with the self fulfilling prophecy theory. This states that if people start tightening the financial belt and preparing for a downturn, inevitably one will happen in the future. I do wonder when the recession will be because this has been a long upside of the business cycle.
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