January 2021 Monthly Briefing
ECONOMY POISED TO GROW
Benjamin L. Varner, Senior Analyst and Economic Specialist
The economy experienced a sharp decline and a significant rebound in 2020. Overall, the economy declined -3.5% in 2020 which was the worst year since demobilizing from World War II and a full percentage point lower than the worst year during the Great Recession (-2.5% in 2009). While the overall results for 2020 were disappointing, the economy appears to be poised to expand.
ILLINOIS EMPLOYMENT AND WAGE UPDATE
Eric Noggle, Senior Revenue Analyst
Illinois’ dramatic drop in employment during the COVID-19 crisis begs the question, “In what areas did these job losses occur—were they widespread, or concentrated in certain sectors?” This can be answered by taking a closer look at the Bureau of Labor Statistics’ eleven employment subsectors.
In 2020, every subsector experienced yearly average declines in employment when compared to the prior year. Not surprisingly, due to COVID-19, the largest level of decline was in “Leisure and Hospitality” with a falloff of 146,400 jobs, which represented a year-over-year decline of 23.6%. This level of decline is not surprising due to the impact that the pandemic has had on many businesses that fall into this category (such as the travel industry, hotels, conventions, etc.).
REVENUE: JANUARY RECEIPTS FLAT OVERALL—FALLOFF IN FEDERAL SOURCES CONCEALS STRONG TAX RECEIPTING
Jim Muschinske, Revenue Manager
Base general funds revenues grew a modest $21 million in January. While federal sources experienced a very weak month coming off of December’s phenomenal performance, the drop of $279 million was more than made up for by continued strength demonstrated by income and sales taxes as well as other state tax sources.
Excluding borrowing related activity, through the first seven months of the fiscal year base receipts are up $2.390 billion. In addition to the December surge in federal sources, that growth also reflects the timing of income tax receipts related to the filing deadline extension. Through January, combined net income tax receipts are up $1.923 billion. While over half of those gains can be attributed to the shift of FY 2020 final payments into early FY 2021, surprisingly strong underlying base income tax receipting must be recognized as well. So too must the $129 million net growth in sales tax receipts be commended. At this point in most fiscal years, a year-to-date growth rate hovering around 2% would be all but ignored, but given that growth rate reflects against a pre-pandemic period, sales tax performance becomes all the more impressive.