JACKSON — Recovery from the recession will be slow for Mississippi and it could be another five years before employment levels return to where they were in 2000, before the last financial downturn, a state economist says.
Marianne Hill is a senior economist for the Institutions of Higher Learning and the author of the Mississippi Economic Review and Outlook, a report released Tuesday. Hill predicted unemployment will continue to rise into 2010.
Hill predicted the unemployment rate will climb to 10.4 percent before the year is over. The jobless rate was 9.6 in May, the most recent statistic available.
The economic forecast said unemployment levels will gradually ease back down to 8.7 percent by 2013.
Hill said employment levels are not forecast to return to 2000 levels until 2014 because of the predicted slow pace of recovery. The last recession began in March 2001.
“After the downturn in 2000-2001, it took us until the end of 2007 before we were just getting back to the levels that we had in 2000 ... and then this recession hit,” Hill said. “So that’s why it’s taking us that long to get back to 2000 levels.”
Employment declined in construction, finance, manufacturing, leisure and hospitality, trade, transportation and utilities, and financial sectors from the first quarter of this year compared to the same period a year ago.
“With unemployment rising and savings slashed by the plunge in stock prices, consumers are skittish,” the economic forecast says. “Job loss is widespread across the state, tax revenues are coming in below estimate, and cuts in the state budget will bring additional downward pressure on the economy.”
The state appears to be shedding jobs faster in the current downturn than those of the 1980s or 2000, IHL’s Center For Policy Research and Planning said last month in its monthly publication of economic indicators.
One positive note, Hill said, is the federal stimulus program will help ease budgetary pressures into next year and “at that point, some of the longer-termed projects, like highways and bridges and rebuilding of schools, will be put into place.”
“So there should be some continuing positive effect,” Hill said.
State and local governments in Mississippi are receiving more than $2.8 billion in federal stimulus money from October 2008 through December 2010. The state will receive about $479 million for education and $779 million for Medicaid over two fiscal years.
The money could help calm the effects of sluggish state revenues. Gov. Haley Barbour cut state spending in November and January because of slow tax collections.
“Without the funds coming to the state under the Obama stimulus package, however, cuts in planned state spending to cover the shortfall would have been significantly greater,” the forecast said.
The turnaround in the state economy, forecast for mid-2010, is in line with national trends, Hill said.
