Revenue Forecast Legislative Fiscal Division
Fortune Magazine – 1. Quarterly growth in GDP “Not everyone is 2. Monthly Job growth feeling the recovery: 3. Unemployment rate the economy as told by 8 charts” Lance 4. Uneven unemployment Lambert November 14 5. Former workers 6. Uneven by education 7. Manufacturing 8. Construction
GDP growth US and Montana -31.4% 33.1% -12.0% -10.0% 10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 1975:2 1977:1 1978:4 1980:3 1982:2 1984:1 Quarterly Montana GSP 1985:4 not seasonally adjusted 1987:3 1989:2 IHS Markit data 1991:1 1992:4 1994:3 1996:2 1998:1 1999:4 2001:3 2003:2 2005:1 2006:4 2008:3 2010:2 -10.4% 2012:1 2013:4 2015:3 6.9% 2017:2 2019:1
US and Montana Monthly Job Growth Montana lost 63,500 in employment in April By September 42,600 have been regained Note employment shown below includes self- employed, while US data to the left does not. In Montana, total employment is down 12,000 jobs, while payroll employment is down 21,700 jobs. Montana DLI dashboard
US and Montana Unemployment Rates Montana’s unemployment rate reached 11.9% in April In September the rate was 5.3% Prior to the pandemic it was 3.5% Montana DLI dashboard
Unemployment Rates – September 2020 Montana Counties from 8.3% Garfield darkest blue above to 1.8% Glacier lightest blue above Montana DLI Montana as a whole is 5.3% dashboard County data is not seasonally adjusted. DLI data.
Former workers • Only those looking for work are counted as unemployed • Choosing to wait out the virus • Parents needing to be home with kids as schools are remote and day cares are unreliable with frequent quarantine orders • Montana’s labor force declined by roughly 17,000 in April, but has nearly fully recovered, down only 0.5% in September. However, an estimated 20,000 parents have had to decrease work hours or make other accommodations due to a lack of childcare and the need to supervise children learning at home.
Manufacturing bouncing back 15 16 17 18 19 20 21 22 2006:1 2006:3 2007:1 2007:3 Employment (NAICS), Manufacturing (Thous.) 2008:1 2008:3 2009:1 2009:3 2010:1 Employment (NAICS), Manufacturing (Thous.) 2010:3 2011:1 2011:3 2012:1 2012:3 2013:1 2013:3 2014:1 2014:3 2015:1 2015:3 2016:1 2016:3 2017:1 2017:3 2018:1 2018:3 2019:1 2019:3 2020:1 2020:3
US and Montana Construction is strong 20 22 24 26 28 30 32 34 2006:1 2006:3 2007:1 2007:3 2008:1 Employment (NAICS), Construction (Thous.) 2008:3 2009:1 2009:3 2010:1 Employment (NAICS), Construction (Thous.) 2010:3 2011:1 2011:3 2012:1 2012:3 2013:1 2013:3 2014:1 2014:3 2015:1 2015:3 2016:1 2016:3 2017:1 2017:3 2018:1 2018:3 2019:1 2019:3 2020:1 2020:3
Montana details
Doing well – Outdoor activities • Golf, camping, hiking, hopefully skiing • Boating and Off road vehicles - Rental tax up 21.4% July-October • Yellowstone and gateway communities – Park at Tourism in 91% of last five year average • West side of Glacier – while the park was at 52% of Montana - last 5 year average, the Flathead did well Mixed Not doing well • Accommodations - tax down 16.8% July-October • Restaurants and Bars • Employment in Accommodations and food service down 12.4%
Mining – Tax collections and industry down • Oil and Gas tax down Employment (NAICS), Natural Resources & Mining (Thous.) • Coal severance tax down 28.7% 12 in the first four months of FY 10 2021 over previous years 8 • US Mineral Leasing down 6 • Metal Mines tax down 4 • Employment declining 2 - Employment (NAICS), Natural Resources & Mining (Thous.)
Average growth 2.7% / year Average growth 1.7% / year 60,000 Gross State Product 50,000 October IHS Markit Gross State Product (GSP) 40,000 Slower Growth next four years From 2019 to 2023 forecast grows 7.1% over 30,000 four years or an average of 1.7% per year From 2015 to 2019, the previous four year’s 20,000 growth is 11.1% or an average of 2.7% per year 10,000 - 2018 2019 2020 2021 2022 2023
Sum of Government 100% IHS Markit Forecast Sum of Other Services 90% Industry Share of Sum of Leisure & 80% Hosp Gross State Product Sum of Health+ 70% Sector change from 2019 to 2023 is Sum of Professional+ significant: 60% • Leisure and Hospitality DOWN from 5.1% Sum of Real Estate+ of GSP to 4.1% 50% Sum of Finance and In • Professional and business services UP from 7.7% to 8.6% Sum of Information 40% • Real estate and rental UP from 14.1% to 15.3% Sum of Trade, Utils • 30% Mining reduced DOWN from 4.2% to 1.8% (mining peaked at over 6% from Sum of 2008 – 2014) 20% Manufacturing Sum of Construction 10% Sum of Mining 0% Sum of Agriculture, F 2019 2023
Agriculture – relatively stable • Agriculture is expected to have a close to “average” year • Defaults slightly up • Many are prepaying debt • Don’t appear to be taking on new debt at the same rate as before
70,000 Average growth 4.3% / year Average growth 2.9% / year Personal Income 60,000 October IHS Markit 50,000 Spike in transfers in 2020 from stimulus Other inc packages 40,000 Transfers FY 2020 assumes two stimulus packages Div, interest, rent Slower Growth next four years 30,000 Other labor inc From 2019 to 2023 forecast personal Income grows 12.2% over four years or an average of Wages 20,000 2.9% per year From 2015 to 2019, the previous four year’s 10,000 growth is 18.3% or an average of 4.3% per year 0 2018 2019 2020 2021 2022 2023
Technology and automation Accelerating Innovation Trends Already in the Remote work Economy Relocation
2000 1990 1980 1970 1960 1950 1940 1930 1920 New Voters and New Residents 4,934 Newly registered voters from September 1, 2020 through election day, with new id 4,396 numbers by decade of birth totaled 21,869 or 2.9% of Montana registered voters. 3,576 Those born after 1990 are likely to be voters that are new to voting and may or 2,739 may not be new to Montana. There were 2,547 9,330 new voters born before 1990 or 2,370 1.2% of registered voters Those born before 1990 may be new to voting or may be in migrants to Montana. 961 A total of 12,539 new voters were born before 1990 or 1.7% of registered voters. 294 52 Data from the Secretary of State
Future IHS Markit Economic Forecast updates Stimulus / Surge / Vaccine
IHS Markit October – Personal Income
Economic Forecast to be Updated Vaccine Downward: Stimulus assumed in the October IHS Markit forecast, but not the November Revised IHS Markit modeling with current case surge Stimulus omitted Upward: Revised Vaccine availability was not modeling with included current surge
Revenue Forecast
• People are filing quarterly payments to be penalty free – aka Safe Harbor • February filing could the first indication of big refunds • Individuals may accelerate income into 2020 to CPA input avoid higher taxes in 2021 in anticipation of higher federal tax rates • Uncertain what losses will finally materialize, many companies doing well with the PPP and state programs
Year-Over-Year Monthly Withholding Since FY 2019 20.0% 15.0% Pre-pandemic 6.8% Post-pandemic 10.0% 3.9% 5.0% 0.0% -5.0% -10.0% Monthly Withholding Growth 3 Month Moving Average
Year-Over-Year Monthly Withholding Since FY 2019 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Monthly Withholding Growth 3 Month Moving Average Wage Growth
Reserve Balances Beginning FY 2021 ($ millions) $700 Fire Fund $600 Balance, $55 Budget Stabilization $500 Reserve Fund Balance, $118 $400 $300 General Fund Balance $200 $452 $100 $0 Beginning FY 2021 Balances and other tools LFD training on Managing Volatility
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