October 2017 Monthly Briefing
ECONOMY: ILLINOIS IN PERSPECTIVE
Edward H. Boss Jr., Chief Economist
Illinois’ economy continues to lag the nation and surrounding states even as the current economic recovery, while improving, remains the weakest in the post WWII period. The latest Illinois forecast shows Real Gross State Product remaining in the 1.0% area each year from 2015 through 2017, before rising at an average growth rate of 1.7% in the years 2018- 2020.
One of the more notable aspects of Illinois has been its recurrent outflow of population, which at best is forecast to hold steady by 2019 and 2020.Total employment in Illinois thus indicates little growth with its unemployment rate to continue higher than in most states. The national unemployment rate was 4.2% in September as were the 12 states comprising the Midwest. However, unemployment rates differed greatly among the Midwest states. The highest rates were in Ohio, with an unemployment rate of 5.3%, followed by Illinois at 5.0%, and 4.3% in Michigan. The lowest rates were North Dakota and Nebraska with rates of 2.4% and 2.8%.
Illinois needs to break from its pattern of shrinking population and slow job growth. September’s nonfarm payroll jobs fell 10,800 and are only 3,700 more than a year earlier. Manufacturing jobs gained 1,100, but were 2,600 below a year earlier. Many states are seeking new job opportunities and compete vigorously for companies to locate within their borders. Recent attention centers on Amazon that is looking to build a second headquarters site with the creation of 50,000 high-paying jobs. Chicago and Illinois have submitted several proposals, as have others. The determination may depend on the benefits offered as well educational facilities, central location, and perception of a business-friendly environment. The technology giant Foxconn had been looking for a major expansion, but in the end chose Wisconsin. Toyota and Mazda also were looking for a possible site for a new auto factory. However, it has been reported that Illinois was informed that it was no longer being looked at.
REVENUE: OCTOBER RECEIPT GAINS REFLECT HIGHER INCOME TAX RATES, FUND SWEEPS, AND FUND TRANSFERS
Jim Muschinske, Revenue Manager
Excluding $204 million of interfund borrowing, base general funds revenues increased $618 million in October. As expected, gains were experienced in income taxes, reflecting the recently enacted higher tax rates. In addition, corporate income tax growth was affected by last year’s receipt disruption brought about by IDoR’s ledger accounting system conversion. October receipts reflected $81 million in funds sweeps, and while not counted in “base” revenues, $204 million in interfund borrowing also occurred during the month.
Excluding $354 million from interfund borrowing, base general funds grew $1.972 billion during the first four months of the fiscal year. Increased income tax receipts stemming from the recently enacted higher tax rates, fund sweeps, as well as an increase in federal sources resulted in this significant gain.