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News Link • Government Debt & Financing

Fiscal Mess At Local Governments Will Be The Front Page Story Of 2011

State and local governments in the U.S. are in a state of disarray and the need to cut spending to close massive fiscal gaps are simply acute. As a result, companies that sell into this part of the economy — the lower levels of government represent 13% of the economy, which is the largest contributor outside of the consumer and double the relative share of capital spending — are extremely vulnerable to cutbacks in sales and squeezed order books. And, it is hardly likely that this problem is limited to Cisco, which proved to be a key bellwether at turning points in the market in both 2000 and 2007. The fiscal mess at the state and local level will very likely be the front page story in 2011 and the retrenchment in this sector poses the greatest headwind regarding the economic outlook

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