One of Mississippi’s top economic forecasters told lawmakers on Thursday that while the national economy appears to be gaining strength, the picture is more muddled for Mississippi.
Darrin Webb, the state economist, told the Joint Legislative Budget Committee that the U.S. economy is showing signs of momentum at the beginning of 2017. This has been marked in part by a rebound in the energy sector, orders of capital goods, January job gains and an uptick in inflation.
At the same time, “signals are more mixed in Mississippi,” Webb said. He pointed to slowing employment and income growth in the fourth quarter of 2016 as well as weak sales and income tax collections, which Webb said are the revenue sources most closely connected to economic activity. However, building permits are up, the length of the work week at manufacturing plants is high — a sign of demand for goods — and unemployment claims are declining.
Webb said this adds up to a precarious fiscal picture for the state, including the possibility of recession.
“It doesn’t take much when you’re struggling to throw you into negative territory,” Webb said.
A slow uptick in oil prices is another positive sign, Webb said. In addition to the number of oil rigs and capital investment increasing, he said, he hears anecdotally that more oil workers laid off when petroleum prices plummeted are going back to work.
Webb added that 2016 was the first time Mississippi saw two years of consecutive economic growth since the Great Recession, partly due to volatility in agricultural prices. As a result, he expects growth to continue but at a slower pace.
Rep. Greg Snowden, R-Meridian, said several factors are beyond the state’s control and pointed to a recent report from the National Conference of State Legislatures showing that revenues are falling short in 19 states.
“This is a nationwide problem,” Snowden said. “There are a lot of things happening here that we don’t necessarily have our finger on the lever for.”