Commission on Government Forecasting and Accountability
HOUSE
Donald Moffitt, Co-Chair
SENATE
Donne Trotter, Co-Chair
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Facility Closure Meeting Notice
DATE: Monday, July 13, 2015
TIME: 4:00 P.M.
PLACE: Room 212, Illinois Capitol Building, Springfield, IL
TOPIC: Public Hearing on Proposed Closure of IL State Museum
May 2015 Monthly Briefing
ECONOMY: WHERE’S THE REBOUND
Edward H. Boss Jr., Chief Economist

This year started out resembling last. The initial report on first quarter 2015 Gross Domestic Product showed growth of 2.2% while a second estimate now shows an actual decline of 0.7%. While many expect some improvement, no sharp rebound like last year is likely based on recent economic reports. Examples include: retail sales, a softening in consumer confidence, and a U.S. trade deficit which reached a 6-year high. In addition, an inventory overhang in the first quarter could subtract 1.1 percentage points from GDP growth in the second quarter according to Global Insight.

A sub-sector of the economy can be found in the Federal Reserve’s measure of Industrial Production. Industrial production reached a recent peak at the end of 2007 as the expansion came to an end and the recession began, hitting a low point when the recovery began in mid-2009. It wasn’t until September 2013 that the index regained the level reached prior to the recession.

The recouping of industrial production had a positive effect on manufacturing employment which had been declining since the 1980s. Manufacturing employment hit a high in mid-1979 but by March 2010, 8,100,000 jobs had been lost. Currently, 869,000 jobs have been recovered. Many were in the “rust belt” states in the Midwest. Behind this improvement was the effect of increased petroleum output in the U.S. that lowered energy prices and improved U.S. competitiveness. Illinois also lost manufacturing jobs during roughly the same period, but unlike many surrounding states, manufacturing employment continues weak. In April of 2015, manufacturing employment totaled 576,400, down 1,200 for the month and 3,300 lower than a year earlier.

In conclusion, no sharp rebound from the negative growth report of the first quarter appears likely. This would be in contrast with last year’s pattern. Already the Federal Reserve, which had indicated the economy was strong enough to edge up the federal funds rate, implied it will delay what had been an expected June date until September or later, dependent on the data and world conditions.

MAY RECEIPTS FALL AS EXPECTED
Jim Muschinske, Revenue Manager

Overall general funds revenues fell $288 million in May. Despite continued fund sweep activity allowed under P.A. 99-0002, the falloff was due mainly to the lower income tax rates now in effect. One less receipting day for the month also contributed to the decline.
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With only one month remaining in the fiscal year, overall receipts are down $356 million through May. The falloff would have been significantly larger if not for the $1.236 billion in year to date fund sweeps conducted over the last two months.