July 2014 Monthly Briefing
ECONOMY: MORE OF THE SAME?
Edward H. Boss, Jr., Chief Economist
The current expansion was 5 years old in June. Individual cycles, however, vary widely with contractions as long as 65 months and expansions as long as 120 months. Over time expansions have lasted longer while contractions have shortened. And, while there continue to be severe downturns from time to time, they have not been as deleterious as earlier ones.
Real GDP has traded in a 2% to 2 1/2% range since the recovery got underway, below that of earlier recoveries. After contracting 2.8% in 2009, the economy grew 2.5% in 2010; rose 1.6% in 2011; 2.3% in 2012; and 2.2% in 2013. In 2014 real GDP rose at a 4.0% in the second quarter following a contraction of 2.1% in the first for an annual rate of increase of 1.9% for the first half of the year.
Despite large reductions in unemployment rates, the details behind the data paint a less rosy picture. Since the end of 2009 the U.S. unemployment rate dropped from 9.9% to 6.1%; the rate in the Midwest from 10.1% to 5.9%; and in Illinois from 11.3% to 7.1%. While there was little difference in unemployment rates among the groups at the end of 2007, gaps soon developed, particularly with Illinois. Indeed, the labor force participation rate continues at its lowest level since 1978. While the U.S. has replaced all the jobs lost during the last recession, more are part-time, unlike Illinois which never replaced all the jobs lost in the previous recession before the last one began.
In conclusion, while most economists do not foresee a new recession on the horizon, neither do they see any near-term breakout from the pace of advance seen in recent years. Moreover, the divergent trends within sectors of the economy are likely to remain.
REVENUE: FY 2015 BEGINS MIXED AS ONE-TIME REVENUES HELP MONTHLY TOTAL
Jim Muschinske, Revenue Manager
Overall base revenues grew $184 million in July. While both personal and corporate income taxes dipped slightly, sales tax performed quite well. A surprisingly big month for inheritance tax receipts as well as a one-time boost of approximately $110 million from court settlements related to pharmaceutical company[ies] via the Attorney General‘s Office. July had the same number of receipting days as the prior year.
Other sources jumped $128 million, although the majority of that gain was related to the aforementioned one-time $110 million court settlement proceeds. Sales tax started the new fiscal year in similar fashion to how the last ended, as receipts continued their strong performance by growing $39 million. Inheritance tax jumped $24 million, although its success is believed to be one-time in nature. Insurance taxes added $4 million in gains, while corporate franchise taxes and interest earnings each managed a $1 million increase.
Both personal and corporate income taxes experienced declines, albeit minor, to begin the fiscal year. Gross personal income tax dipped $7 million, or $12 million net of refunds. Gross corporate income taxes were off $5 million. Public utility also dropped in July, falling $7 million.
Overall transfers rose $13 million in July. Riverboat transfers grew $1 million while other transfers added $12 million. Federal sources declined slightly for the month, falling $2 million.