(The Center Square) – The latest update on Illinois’ economy going forward offers a wide range of possibilities from an economic soft landing to a full-scale recession.
The Commission on Government Forecasting and Accountability provided an update on the 2023 forecast to the Illinois State Board of Education Wednesday and said it is increasing its fiscal year 2023 revenue outlook to just over $51 billion. That is only $259 million above fiscal 2022 final levels.
They cited strong gains in revenues for the first third of the fiscal year necessitating an increase in the fiscal 2023 revenue outlook. However, a conservative outlook for the remaining two-thirds of fiscal 2023 will be assumed at this time because of several factors, including COVID-19, the war in Ukraine, and high gas prices, which affects consumer spending.
Revenue manager Ed Noggle said it also appears consumer sentiment is changing.
“We are starting to see the returning trend and shift from taxable goods to non-taxable service goods,” Noggle said. “This could be a problem for sales tax revenues going forward, and again there is no federal stimulus expected for the next couple years that has helped boost spending like in the past.”
Noggle said the key will be the rate of inflation going forward.
“If inflation gets to the point where it starts to reduce sales, and people cannot buy as many things as they used to do, this could eventually lead to job losses, and if there are job losses, that could lead to recession,” Noggle said.
One of the econometric firms the commission utilizes is IHS Markit. Commission Chief Economist Ben Varner said in one of their worst-case scenarios, a lot of people are going to be out of work.
“They basically have Illinois going into a recession as their baseline and the unemployment rate going up to 6.2% by the end of next year,” Varner said. “It is what it is but I think that might be a little dour for my taste.”
