Economics and Revenue Forecast for the 2021 Biennium
Revenue forecasting steps Current Events Forecast Revenue Estimate
Revenue forecasting steps Current Events Forecast Revenue Estimate
Revenue forecasting steps Current Events Forecast Revenue Estimate
Revenue forecasting steps Current Events Forecast Revenue Estimate
Economic Forecast
IHS Markit Economic Forecast • LFD uses several state specific and national forecasts in revenue modeling • Gross state product, while not specifically used in LFD modeling, encompasses underlying trends and is consistent with overall economic forecast and parameters used by LFD • The following slides walk through the IHS Markit trends for • Gross State Product (GSP) • Personal income (PI) • Total wage disbursements (Wages)
10% 8% GSP Growth: Average in 6% CY 2018/ Average 4% CY 2019 Slower in 2% CY 2020/ CY 2021 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -2% -4% IHS Markit nominal Montana GSP growth
GSP Growth by Industry Sector: All Industries Contributing to Growth GSP Growth by Industry Sector: All Industries Contributing to Growth $ Millions Trade, Transp & $3,000 Utilities Services $2,500 $2,000 Mining $1,500 Manufacturing $1,000 $500 Government $0 2014 2015 2016 2017 2018 2019 2020 2021 Construction -$500 -$1,000 Ag, Fishing & Forestry -$1,500 $ Growth in GSP by Industry Sector: LFD calculations based on October IHS Markit data
GSP , PI & Wages: Similar Growth Patterns 10% 8% 6% 4% 2% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -2% -4% GSP Growth Personal Income Growth Wages Growth % Growth in FY GF, GSP, PI, Wages - LFD calculations based on SABHRS & October IHS Markit data
GF Revenue more volatile than the Economy 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 -5% -10% GSP Growth Personal Income Growth -15% Wages Growth GF Revenue - Excl 2019 Bien OTO % Growth in CY GSP, PI, Wages - LFD calculations based on October IHS Markit data
Revenue Estimate Driving Through the Noise
4.5% 4.2% 4.0% 2021 Biennium 3.7% 3.5% Ongoing Growth 3.0% 3.0% by Major Source 2.5% 2.0% • Individual income tax growth contributes about 1.5% 2/3 of total general fund growth 1.0% • Corporate Income Tax and 0.5% Oil and Gas are relatively flat 0.0% FY 2019 FY 2020 FY 2021 Individual Property TCA Interest Earnings Remaining Sources
Slightly Price stability declining production Oil & Natural Gas Revenue Stable
$/bbl $120 Price of Oil $100 $80 • November IHS Markit $60 forecast incorporates recent oil price decline $40 $20 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 West Texas Intermediate Oil Price, November IHS Markit data
7% Short – Term 6% Interest Rates 5% 4% 3% 2% 1% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Average of short-term interest rates, November IHS Markit data
2001 9.1% -0.3% 2002 2003 -1.5% General Fund % Growth (excludes 2017 sessions OTO) 2004 10.8% 2005 10.8% 2006 11.6% 2007 7.1% 2008 6.8% 2009 -7.5% 2010 -10.0% 9.6% 2011 2012 5.0% 2013 11.0% 2014 0.0% 2015 5.9% 2016 -3.6% 2017 1.0% 2018 9.0% 3.7% 2019 2020 4.2% 2021 3.0%
Risks: Tax Payer Choices Economic Uncertainty
Short-Term Risk: Revenue Uncertainty Taxpayer Choices & Federal Tax Law Actual Fiscal Year Anticipate Timing income Revenue
Possible Impact from Taxpayer Behavior: Slump and Lump in the Snake “Normal” CY 2014 / CY 2015 / CY 2016 / CY 2017 / CY 2018 / CY 2019 / CY 2020 / CY 2021 / FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Bonuses Profits
Out Years: IHS Markit Economic Uncertainty Trade war uncertainty Tight labor market Energy price uncertainty Global growth uncertainty • Brexit/Euro splintering • China slowdown Geopolitical • North Korea • Iran, Syria, Ukraine, Russia, and others
Overall estimate details Specific source Revenue team details Comparison to Executive
Recommend
More recommend
