The Government Forecasting and Accountability Commission has released its latest monthly report and Illinois' economy is not putting up a good showing in it. The report indicates that improvements in sales tax revenues and personal tax revenues are not impacting the economy positively merely because they are being absorbed by the abysmal corporate tax figures. According to the report, the past two months witnessed an improvement in manufacturing employment figures but now it is back to its March 2011 levels.
The reason behind the unemployment rate decrease
In the words of the COGFA Chief Economist, the unemployment rate fall is due to the fact that more and more Illinois residents are just giving up on finding jobs. This is not a positive sign for the economy at all because there are fewer and fewer people contributing to the revenues generated within the economy. Manufacturing jobs are still on a downward trend here.
Indicators of poor economy
It is not just the declining manufacturing jobs scene that speaks volumes about the inherently poor economy but also many other signs. Registrations for new cars and trucks is also down and this indicates a slowdown in automobile purchases. Permits for single family homes is also down significantly, to the tune of almost 5%, when compared with just a month ago. This clearly shows that housing starts will be showing the impact of the economic slow-down here in the coming months.
Corporate income tax showcases a 'disastrous year'
Adding to the problem, corporate income tax revenue had a very poor showing as well. In the words of COGFA officials, it has been 'disastrous' with overall revenue from this quarters being very subdued. When compared with year- to- date figures, these numbers are significantly lower. While personal tax has shown a marginal gain of 2%, sales taxes remain the same as last year but it is in corporate tax income revenues that the major adverse impact is seen. Here, a fall of $909 million is seen, which will substantially impact the overall economy.
There is no doubt that Illinois is recovering very weakly, at best and that a quick turnaround is definitely not likely. The political environment is not helping the situation at all with some decision on key issues being left unresolved. The one silver lining in all of this seems to be tourism which is inching its way up in Illinois. Whether it will be enough to make a difference to the economy remains to be seen.