A bit of the old Wyle E. Coyote moment of mid air suspension. Still, likely a 3% change, and it has been a while that we have seen it, all by itself it is fine. Except it hits the institutional pension funds that have squeezing obligations already.
California is already at a standstill on new public sector hires. A break even year in 2019 accelerates the slowdown. Local municipalities are going from double whammy to triple whammy, taxes up, pension costs up, old debt needs refinance at higher rates, and a few teachers' strikes need paying for. Not to mention rising medical costs. Like I have been saying, the surplus has already been spent.
Still, this is all known unknowns, mostly hedged and leading to a mild blue bar.
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