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November 4, 2011 at 4:46 PM

State's chief economist says nothing bad has happened lately

Posted by Andrew Garber

In what may pass for good news nowadays, the state's chief economist on Friday said nothing really bad has happened since he gave his last forecast of tax collections in September.

"Two months have passed since the September forecast, and nothing has gone off the rails," Arun Raha, the state's chief economist said Friday, but he added, "It is premature to stop worrying about the future."

House Ways and Means Chairman Ross Hunter, D-Medina, said that reading the tea leaves, he's expecting Raha's next revenue forecast on Nov. 17 to be "flat to down, but not a whole lot."

In September, Raha's forecast left a crater in the state budget. Lawmakers will go into special session later this month to deal with a $2 billion shortfall.

Raha on Friday said there are still plenty of risks ahead.

"The main threats to Washington's economy today lie well outside our region," he said in Friday's report. "It seems that for every step forward that Europe takes in resolving its financial mess it takes half a step backward, adding to global financial volatility and nervousness. The key for the U.S. and consequently Washington economies is whether the European policy authorities can be successful in containing a sovereign debt crisis in Southern Europe from turning into a full blown European banking crisis. The former would do some damage, but the latter would be devastating."

Raha also warned of political gridlock in Washington, D.C., and said that if Congress doesn't reach agreement on a plan to cut $1.5 trillion of debt over the next 10 years then automatic cuts in both military and non-military spending will be triggered.

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