Fall 2016 issue of Horizons

PUBLIC SECTOR

State of the Economy: A View from the Public Sector by Pat Miller, CPA

M uch like businesses in the private sector, state and local governments are also affected by a myriad of economic factors. However, where private sector businesses generally have a profit motive and shareholders to appease, entities in the public sector utilize different metrics to determine how the state or local governmental entity is faring economically. Some of the most common indicators that signify the fiscal stability of a governmental entity are unemployment rates, budget increases or cuts and the return on investments. Unemployment Not long after the recent economic crisis, where an estimated 8.7 million jobs were lost between late 2007 and early 2010, many states and local municipalities have placed a heavy emphasis on regaining those lost

jobs and closely monitoring unemployment rates, in order to affirm that the recovery from the economic crisis is complete. In 2016, the news regarding these metrics has been mixed. The states of Missouri, Tennessee and Colorado have reported increases in employment since the beginning of 2016. An increase for all of these states of between 25,000 and 90,000 jobs, while the state of Kansas has approximately 2,000 fewer people employed than it did at the beginning of the calendar year. The unemployment rate, which measures the number of citizens actively seeking work compared to the entirety of the labor force, has remained relatively consistent for each state in 2016 except Tennessee, which has reported a decrease of 1.3% in the first six months of the year.

page 36 | horizons Fall 2016