As I’ve emphasized many times in the past, austerity at the state and local level forced by balanced budget requirements, falling tax revenues, and increasing demand for public services due to the recession had a large, negative effect on the economy. The failure of the federal government to backfill state and local budgets and stop this from happening was a big policy mistake:
Three years into recovery, just how much has state and local austerity hurt job growth?, by Josh Bivens and Heidi Shierholz: …the public sector has seen massive job loss in the current recovery—largely due to budget cuts at the state and local level — which represents a serious drag that was not weighing on earlier recoveries. …