Commission on Government Forecasting and Accountability
HOUSE
C.D. Davidsmeyer, Co-Chair
SENATE
Heather Steans, Co-Chair
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November 2018 Monthly Briefing
ECONOMY: APPEARS BRIGHT FOR STRONG HOLIDAY SALES
Julie Bae, Pension Analyst/Economic Specialist

In October, the U.S. unemployment rate remained unchanged at 3.7%, a 49-year low, and both personal income (pre-tax income) and disposable income (after-tax income) increased 0.5%, the biggest gains since January. As consumer confidence rose, the savings rate fell to 6.2% in October from 7.0% in the beginning of this year. Personal consumption expenditures, a measure of national consumer spending on goods and services, rose 0.6%, the highest monthly increase since March. The fourth quarter of 2018 appears to be off to a good start, with strong labor market conditions and consumer confidence observed by these economic indicators in October.

REVENUE: AS EXPECTED, NOVEMBER 2017's SURGE IN REIMBURSEMENTS RESULTS IN LARGE MONTHLY FEDERAL SOURCES DECLINE IN 2018
Jim Muschinske, Revenue Manager

Excluding $250 million in interfund borrowing, as well as $2.500 billion which was deposited into the GRF stemming from the $6 billion bond sale executed in November 2017, base monthly receipts fell $1.738 billion. The significant drop in revenues was not a surprise and merely reflects last year’s reimbursable spending surge made possible as a result of the bond sale. That important item aside, most of the other revenue sources showed mixed results this November. The month had one less receipting day compared to the prior year.
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Excluding interfund borrowing, last year’s $2.5 billion bond proceed transfer, and the $700 million related to the Treasurer’s Investments this fiscal year, base general funds for the first five months of FY 2019 are behind last year by $1.143 billion. Again, the reason for the decline is due to last year’s federal reimbursement surge. Absent that, the most closely-tied economic sources experienced impressive gains. Gross personal income tax is up by $924 million, or $775 million net. Gross sales tax receipts are up by $258 million, or $236 million net. Gross corporate income taxes are up by $136 million, or $118 million net. All other tax sources combined added $83 million to the year-to-date gain.

Overall transfers increased by $1 million through November. And again, Federal sources are down by $2.356 billion, as on a comparative basis last year was record setting due to reimbursable spending made possible from bond sale proceeds.