Commission on Government Forecasting and Accountability
HOUSE
C.D. Davidsmeyer, Co-Chair
SENATE
Heather Steans, Co-Chair
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April 2019 Monthly Briefing
ECONOMY: IS THE U.S. HEADED FOR A RECESSION OR NOT?
Julie Bae, Pension Analyst/Economy Specialist

Since the 2008 recession, the U.S. has experienced an almost 10-year economic expansion, the second longest in its history. Unfortunately, like all “good things” it will eventually come to an end. Consequently, many forecasters are trying to predict when the next recession will occur. For now, the U.S. economy appears to be doing fine, although most predict slower growth this year. Overall, it is hard to predict the timing of a downturn, especially with mixed signals.

April 2019 Bond Sale and Ratings
Lynnae Kapp, Senior Analyst

The State competitively sold $440 million in General Obligation bonds at the end of March 2019. The bonds were sold in two series. The April 2019 Series A taxable bonds of $300 million had 9 bids with a true interest cost of 5.74%. The Series A bonds will be used for the Pension Acceleration Bond buyout program and mature in 2044.

The April 2019 Series B refunding bonds of $140 million had 14 bids receiving a true interest cost of 3.33%. The Series B bonds, which will mature in 2028, will create a net present values savings of 7%.

REVENUE: STRONG INCOME TAX AND FEDERAL SOURCE RECEIPTS FUEL APRIL’S IMPRESSIVE PERFORMANCE
Jim Muschinske, Revenue Manager

In April, base monthly receipts increased $1.502 billion. The jump in receipts reflected very strong performances of both personal and corporate income taxes, which in turn allowed reimbursable spending to surge, thereby generating a significant gain of federal sources. An extra receipting day assisted in the overall monthly gain.

While a precise component breakdown is not yet available for April’s income tax receipts, preliminary views point to very strong non-wage income tax performance [e.g. the more volatile capital gains and dividends components]. As a result, this significant one month over performance cannot safely be extrapolated into future underlying growth. Other states have begun to anecdotally report similar strong performance, with most urging caution of future expectations. In Illinois, historically the withholding component comprises approximately 80% of personal income tax receipts, with the remainder roughly split between estimated and final payments. Despite their much smaller percentage make-up, those non-wage components [fueled by capital gains, dividends, and sometimes shifts in tax payer behavior] are the most volatile, demonstrating significant swings in gains/losses. As such, they cannot be counted on to follow predictable trends, nor safely be expected to recur. Again, further analysis is required before any definitive conclusions are made.