Commission on Government Forecasting and Accountability
C.D. Davidsmeyer, Co-Chair
David Koehler, Co-Chair
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August 2021 Monthly Briefing
Julie Bae, Pension Analyst/Economic Specialist

Recent employment data from the Bureau of Labor Statistics (BLS) suggests that the U.S. labor market is in a strong recovery. The unemployment rate declined by 0.5% to 5.4%, the lowest since the pandemic began. Nonfarm payroll employment increased by 943,000 in July, the highest gain in nearly a year. Even so, there is still a long way to go to reach pre-pandemic levels. During the COVID-19 recession, 22.4 million jobs were lost, approximately 16.7 million of which have been recovered so far as the economy reopened. With 5.7 million jobs still needing to be recouped, the U.S. appears to be in a tighter labor market now. Companies have been having difficulties hiring and retaining workers, as evidenced by many companies including Walmart, Chipotle Mexican Grill, McDonald’s, Target, CVS Health, etc. announcing plans for higher wages and/or incentives to attract and retain workers.

Eric Noggle, Senior Revenue Analyst

The inclusion of solid job performance during the majority of the fiscal year causes the FY 2020 average values to appear less severe as compared to how the fiscal year ended. This is important to note when comparing FY 2021 with FY 2020 averages. Despite modest improvement throughout the fiscal year, the average number of jobs in FY 2021 (5.678 million) was 4.4% below the FY 2020 average total. Compared to the pre-pandemic levels of FY 2019, Illinois’ jobs totals in FY 2021 were 7.2% below FY 2019 levels, a difference of approximately 438,000 jobs.

Jim Muschinske, Revenue Manager

Base August general funds revenues grew $257 million overall. Comparatively better sales tax performance coupled with higher transfers into the general funds were more than enough to offset some declines in other revenue areas. A good month for federal sources also contributed to the monthly gain. August had one more receipting day than the prior year.

For the month, gross sales tax receipts were up an impressive $109 million, or $80 million on a net basis. Gross personal income taxes grew $61 million, or $48 million net. While those gains appear unremarkable at first glance, last year’s August receipts did benefit somewhat from that year’s final payment delay to July 2020 [as net receipts were up $246 million that month]. As a result, even a modest gain this August can be viewed in a positive light. Public utility taxes posted an increase of $8 million, as did corporate franchise tax. Other sources grew $4 million for the month, while insurance taxes increased $3 million and vehicle use tax $2 million.
Through the first two months of FY 2022, overall base receipts are down $622 million. However, that drop is misleading given last fiscal year reflected approximately $1.3 billion over that same period from the final income tax payment delay into early FY 2021. Taken in proper context, early performance of FY 2022 revenues are viewed more favorably than absolute levels display.