Week In Review
ECB Chief Economist Praet made a speech in which he stated that the ECB would soon need to determine if sufficient progress has been made for the ECB to begin tapering its asset purchases. The Euro strengthened following these remarks.
While developments in Italy are of concern to the ECB, they clearly want to begin to unwind some of the extraordinary policy accommodation currently in place. This has both the ECB and the Fed moving in a tightening direction.
New Jersey lawmakers continue to work through budget negotiations. Newly-elected Democratic Governor Phil Murphy has proposed a record $37.4 billion budget plan. Governor Murphy is pushing tax increases to fund his spending proposal. Lawmakers, including Democrats, have expressed concern about the tax hikes. Last week, Governor Murphy ordered a state spending and hiring freeze. New Jersey’s budget deadline is July 1. If a budget is not in place, a government shut-down will occur.
New Jersey’s financial woes continue. The state is still struggling with an underfunded pension system and slow economic growth. Adding new taxes to an already high-tax state will not be popular with many voters. Lawmakers must quickly come to a budget compromise. The state cannot afford another government shut-down.