This morning’s jobs report was a bit of a split decision — the private sector jobs number was somewhat decent, but government job cutting was aggressive.
And only half the government cuts were census-related.
The rest came from state governments, which are in dire straits. They don’t have their own mini-Feds to keep them funding, and there hasn’t been enough of a re-bubble in property to get taxes back to their old levels.
Meredith Whitney recently issued a huge report about how the states represent systemic risk, and she’s absolutely right. They’re emerging as the key economic problem.
The states will need bailouts, but the emerging political situation suggests that’s going to be difficult.