Authors of the June report on Illinois’ budget picture recently disclosed the unsurprising bad news about where the state stacks up in terms of debts and deficits.
With revenues from personal and corporate income taxes as well as sales tax falling off the table, “base general revenues ended $1.135 billion below last year’s level,” financial analysts at the state Commission on Government Forecasting and Accountability wrote.
“... through the first three-fourths of the fiscal year, revenues had performed quite well. That all changed in the final quarter as economic and subsequent revenue impacts related to COVID-19 abruptly manifested,” wrote commission revenue manager Jim Muschinske.
That, of course, is when the coronavirus pandemic and subsequent economic lockdown went into effect, turning everyday activities upside down.
The combined public health crisis and economic freeze plunged what was a booming economy with near-record-low unemployment into a deep recession — potentially a depression — overnight.
It was a lousy way to end the 2020 fiscal year, which concluded June 30.
But what else is new?
It turns out that, in addition to the bad news, the commission report contains a glimmer of hope for the future.
Actually, it’s more than a glimmer. But it’s best not to get one’s hopes up because it looks as if the coronavirus meltdown is far from over.
In an essay entitled “Recession to Expansion Already?” commission analyst Benjamin Varner asks the question on everyone’s mind.
“How long will the economy be in recession?”
“Surprisingly, some economic commentators think we might have already seen an economic trough and have begun the next expansion based primarily on the jobs report in May,” he writes.
The so-called experts predicted further job losses in May, perhaps because the economy shed a record 20 million jobs in April. But instead of losing another eight million jobs, as some forecast, the U.S. economy’s non-farm payroll increased by 2.5 million jobs.
“The eventual return of employees to their jobs was not unexpected, but the speed of the return may have caught forecasters off guard,” Varner wrote.
The May boom was followed by a June explosion, a gain of 4.8 million jobs.
As good as that news is, it’s important to keep it in perspective. The jobs gain of 7.3 million jobs in May/June still doesn’t come close to equaling the loss of 20 million jobs in April.
“(The improved numbers do) not mean that the economy is in a good place or could not tumble further. The economy remains well below its peak,” Varner wrote.
Why is that? For one obvious reason: The pandemic and the economy are inextricably linked. If efforts to control the pandemic fall short of hopes and expectations, so will the economy.
More ominously, circumstances can change in a hurry.
Before the pandemic hit, 6.13 million Illinoisans were working. By April, the payroll numbers dropped to 5.32 million.
Not only is that devastating to the individuals who lost their jobs, it’s cataclysmic for units of government that depend on the taxes those workers pay to fund public services.
The state’s overall decline of $1.1 billion in revenue from the 2019 Fiscal Year to the 2020 Fiscal Year is just one manifestation of a nationwide problem that has stricken government at all levels.
That’s why the good news cited by Varner isn’t as good as everyone would like it to be.
The national and state economy is slowly being opened, too fast for some and too slow for others. But further progress is not guaranteed because, Varner said, “threats associated with the COVID-19 pandemic continue to weigh on the economy.”
So there it is. News on the nation and state’s economic recovery isn’t as good as it can get. But it’s as good as it is going to get as long as the threat posed by the coronavirus hangs over people’s heads.
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July 09, 2020 at 07:00PM
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Along with bad, analyst offers some good economic news - Champaign/Urbana News-Gazette
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