Fitch Ratings reports that U.S. state budget planners anticipate slower growth following the Fed’s recent 50-basis-point rate cut. Analysts expect further cuts through 2026, with the labor market already slowing. Karen Krop, Fitch Senior Director, emphasized the importance of fiscal resilience, learned from the global financial crisis, in managing state budgets during downturns. Tax cuts have slowed, with states like California, Illinois, and New Jersey raising taxes to address budget gaps. Job growth in states like Idaho and Utah exceeded pre-pandemic levels, while others, such as Hawaii, lag behind.
