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The Federal Reserve’s anticipated second key rate cut could benefit state and local governments along with the average consumer, the Louisiana Illuminator reports.
The lower interest rates may bring changes for housing development, tax revenue, debt refinancing and bread-and-butter projects like roads, water and sewer.
“On average, lower the interest rates are expected to help stock market returns if historical trends hold,” says Liz Farmer, who focuses on budgets, fiscal distress, tax policy and pensions at The Pew Charitable Trusts. “So generally, you would expect a more positive effect on your average pension portfolio that has a good amount invested in equities.”
It also means states and localities will have lower borrowing costs, which will make it easier to make big long-term changes in infrastructure, as well as bring in higher sales tax collections as a result of more spending. An added benefit: better pension performance in an environment where stocks tend to respond to lower rates, fiscal policy experts at Pew say.
