State Economic Watch

Washington Governor Bob Ferguson has established a new Economic Development Council for the state. The Council is composed of 26 business and government leaders and will “identify practical actions that strengthen Washington’s economy, expand opportunity and help more Washingtonians succeed”. You can find a link to the press release from the Governor’s office here .

 Please note that State Economic Watch will be on a limited publishing schedule during the summer months.

The Federal Reserve Bank of Philadelphia’s State Coincident Indexes declined modestly in May, as the three-month diffusion index fell to 84 from 96 in April, with four states, Alabama, Connecticut, Kentucky and Hawaii posting index declines. The indexes of the remaining 46 states increased over the three month period. Delaware, Idaho, Massachusetts, and South Carolina posted the strongest three-month index gains in the month. The exhibit below is reproduced from the press release.

While this story is a few days old, it remains troubling and deserves a post. The State of Maryland recently dropped Moody’s, which had downgraded the state from Aaa to Aa1, from its rating agency roster. It then promptly dialed-up Kroll Bond Rating Agency to replace Moody’s and serve as the state’s third triple-A rating after S&P and Fitch. Not surprisingly, state officials have reportedly insisted that Moody's downgrade had nothing to do with the fact that it was dropped. While the Moody’s downgrade caused the state to temporarily lose its “triple-triple” bragging rights, the designation is a ridiculous thing for state officials to obsess about because, while it might make good copy for press releases, in reality, nobody really cares about it outside of maybe a few people at a National Association of State Treasurers conference. And it would have been more palatable if state officials had just admitted that the downgrade was the reason it pulled the plug on Moody’s. Instead, ...

Very good article from Governing Magazine about the impact of reduced Colorado River flows on Southwestern states, particularly Arizona. It’s well worth a read. The seven states that share the Colorado River water have been unable to agree on a framework to replace the existing water sharing agreement when it expires at the end of this year. Meanwhile, the flows in the Colorado River Basin continue to decline and reservoirs are well below capacity. As a result of the failed negotiations, the US Bureau of Reclamation will have to impose a set of guidelines on the states, and Interior Secretary Doug Burgum has been quoted as saying that "nobody will be happy". Hopefully, Governing will continue to publish follow-up articles on this very important topic.  

To paraphrase Steve Martin in The Jerk , “The Fiscal Survey of States is here, the Fiscal Survey of States is here!”. The National Association of State Budget Officers released its Spring 2026 Fiscal Survey of States today. For anyone with a keen interest in state fiscal affairs, this is your bible.