Arizona's economic outlook is as grim as it can get, and no one is yet sure when things will start to improve.

In fact, the state's personal income growth is at its lowest level in more than 50 years, and the state is losing jobs at a high rate. The rest of the United States is reeling economically as well.

Economist after economist delivered a barrage of bad news during a presentation March 31 by the Finance Advisory Committee, which is made up of economists who provide lawmakers with forecasts of revenues and economic outlooks. To drive home the point, one economist even showed a picture of a distraught man with his fingers clawing his face as he screams.

All state revenue sources are down – sales tax, individual income tax and corporate income tax. Sales tax collections are projected to be below 2006 levels for several years.

Arizona's revenues for fiscal 2009 continue to slide, and the decline appears to be accelerating, according to members of the committee. The group forecasts a 13-percent decline in revenue this year, much worse than its forecast of a 9.7-percent decline in revenue in January.

In fact, the group says its latest forecast is "optimistic," given the downward trend of revenue collection during the last eight months. Lawmakers had been warned that this year's revenue collections could be down as much as 14.5 percent.

There is a sliver of good news: The group thinks the revenue drop in fiscal 2010 will be 2.1 percent – a little better than the forecast in January, when it projected a 2.8 percent revenue decline.

But "good" is probably not even the right word to describe it, because it still shows revenue will decline compared to fiscal 2009, which saw one of the biggest single-year drops in state history.

The bad news doesn't stop there.

The revenue forecast for fiscal years 2011 and 2012 didn't provide any comfort.

In hard numbers, the group projected that state revenue will be $7.32 billion in fiscal 2009; $7.22 billion in fiscal 2010; $7.62 billion in fiscal 2011; and, $8.15 billion in fiscal 2012.

While the revenues in fiscal years 2011 and 2012 are improving according to the forecast, they will still fall below 2006 levels.

As a result of the continuing decline in revenue coupled with a few other budget factors, the committee projects the state will be $510 million in the hole for fiscal 2009 and $2.9 billion in the hole for fiscal year 2010.

"My takeaway from this," said Rep. John Kavanagh, chairman of the House Appropriations Committee, "is that the situation is getting worse not better, and we better get serious about taking cuts."

Sen. Russell Pearce, chairman of the Senate Appropriations Committee, said the fiscal 2009 budget gap could be filled using stimulus money. Among the things they are considering to help plug the hole in fiscal year 2010 are asset sales, Pearce said.

Economist Elliott Pollack said he doesn't see anything good in the horizon anytime soon.

The problem, he said, is now psychological, as well as economic. That is, banks don't want to lend, and borrowers don't want to borrow. The economy is in a "liquidity trap," Pollack said.

Pollack laid out the landscape this way:

The basic story for the average consumer is he has too much debt, not enough traditional savings, and his job and work hours are declining. Couple that with the dismal performance of the stock market and the loss of home equity.

Meanwhile, there is weakness in domestic spending, and the rest of the world is hurting too.           

Also, the supply-and-demand imbalance in the housing sector is every bit as bad today as it was a year ago. Foreclosures will continue at high rates.

In the 1990s, housing prices increased moderately, and the stock market boomed. In the first half of the 2000s, the stock market did poorly, and the housing prices boomed. Today, it's a double hit to the chin – housing prices are declining and stock market is performing poorly.

"If you want to know what the future looks like," Pollack said, "think of the Eisenhower administration, when people bought just what they needed and nothing more."