The recession we are currently facing across the nation is starting to have an impact here in Alabama. For the last two years, as the economy began to slow down in other neighboring states, Alabama was immune — for the most part. Our unemployment figures were low, and even the housing market had not been as bad as other places. This is starting to change.

In 2007, Alabama had an unemployment rate of 3.6 percent. This number has climbed to 4.9 percent and is expected to break 5.3 percent by March 2009. While this is still below the national average of 6.1 percent, it is trending in a bad direction.

The national problems in the housing market are starting to finally trickle down to us, and the automotive industry is feeling the pinch of high gas costs.

When gas costs more, people are less inclined to buy new cars. Pretty simple, but the state’s economic woes actually go a little deeper.

While Alabama’s tax revenue has seen several years of above average growth, we are now facing a severe decline in revenue. In 2008, the state budget grew by an anemic 2.4 percent. This is barely in line with cost of living adjustments and inflation. The most worrisome number, though, is that sales tax revenue in Alabama actually declined.

This is the first time I can ever remember seeing these numbers actually retract instead of grow. In tough economic times, consumer spending on luxury goods drop. Like Alabama, nearly two-thirds of the US economy is based upon consumer spending. When it drops, we all feel the pinch.

While the federal government seeks to increase spending in order to climb out of this down turn, the truth is, private sector, not government spending is needed now. If the so called bailout policies of the federal government continue to mount, state governments will bear the brunt of the recession.