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As economic projections worsen, so do the likely state budget shortfalls from COVID-19’s economic fallout.
We now project shortfalls of $765 billion over three years.
The new figure, significantly higher than our estimate based on projections of three weeks ago, makes it even more urgent that the President and Congress enact more fiscal relief and maintain it as long as economic conditions warrant.
Unemployment could peak as high as 25 percent this quarter, based on Goldman Sachs’ projections. These projections are considerably more pessimistic than their previous estimates of early April.
The federal aid that policymakers provided in earlier COVID-19 packages isn’t nearly enough. Without substantial federal help, states will very likely deeply cut areas such as education and health care, lay off teachers, and other workers in large numbers, and cancel contracts with many businesses.
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