Stress-Testing States: COVID-19—A Year Later

Source: Dan White, Emily Mandel, Colin Seitz, Moody’s, February 19, 2021
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In the spring of 2020, Moody’s Analytics adapted its state stress-testing methodology in response to the COVID-19 pandemic to estimate the potential for government budget shortfalls that could harm the eventual economic recovery. Through periodic updates over the past year, the picture of state and local government fiscal conditions, blurred at times by the evolving economy and shifting estimates of federal aid, has slowly pulled into focus. With almost a year of hindsight, this paper updates those initial estimates and attempts to explain some of the impacts of the pandemic on the public sector.