May Monthly Briefing
ASSESSING THE ECONOMIC SLOW-DOWN
Benjamin L. Varner, Senior Analyst and Economic Specialist
To fight the spread of COVID-19, governments throughout the country have asked or required their residents to limit their movement and their amount of social contact. As part of this effort, numerous businesses were mandated to temporarily close or made to offer limited services. Implicitly, and often explicitly stated, in this decision making process was a trade-off of economic activity for improved chances of slowing the spread of the virus. This month’s briefing reviews changes in mobility and other metrics to get an indication of how much the economy slowed and how this is affecting retail sales and employment.
REVENUE: BRUNT OF BROAD-BASED WEAKNESS REFLECTED IN MAY SALES TAX REVENUES
Jim Muschinske, Revenue Manager
For the month of May, base general funds revenues fell $341 million. With few exceptions, the vast majority of revenue sources experienced declines, with sales tax receipts reflecting the largest falloff related to COVID-19, and the interruption of the economy. Two less receipting days likely contributed to the monthly decline.
Excluding proceeds from the Treasurer’s Investment program as well as interfund borrowing, after suffering April’s dramatic $2.740 billion falloff, and May’s lesser but still sizable drop, base general funds revenues stand $1.343 billion below last year’s levels. As discussed in previous briefings, through the first three-fourths of the fiscal year, revenues had performed quite well. Unfortunately, economic carnage related to COVID-19, as well as tax day deadline changes have significantly derailed the fiscal year revenue picture.