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Economics and Revenue
Forecast for the 2021 Biennium
Economics and Revenue Forecast for the 2021 Biennium Revenue - - PowerPoint PPT Presentation
Economics and Revenue Forecast for the 2021 Biennium Revenue - - PowerPoint PPT Presentation
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
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Revenue forecasting steps
Current Events Forecast Revenue Estimate
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Revenue forecasting steps
Current Events Forecast Revenue Estimate
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Revenue forecasting steps
Current Events Forecast Revenue Estimate
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Economic Forecast
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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)
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- 4%
- 2%
0% 2% 4% 6% 8% 10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
GSP Growth: Average in CY 2018/ CY 2019 Slower in CY 2020/ CY 2021
Average
IHS Markit nominal Montana GSP growth
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GSP Growth by Industry Sector: All Industries Contributing to Growth
$ Growth in GSP by Industry Sector: LFD calculations based on October IHS Markit data
- $1,500
- $1,000
- $500
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2014 2015 2016 2017 2018 2019 2020 2021 Trade, Transp & Utilities Services Mining Manufacturing Government Construction Ag, Fishing & Forestry $ Millions
GSP Growth by Industry Sector: All Industries Contributing to Growth
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% Growth in FY GF, GSP, PI, Wages - LFD calculations based on SABHRS & October IHS Markit data
- 4%
- 2%
0% 2% 4% 6% 8% 10% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 GSP Growth Personal Income Growth Wages Growth
GSP, PI & Wages: Similar Growth Patterns
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% Growth in CY GSP, PI, Wages - LFD calculations based on October IHS Markit data
- 15%
- 10%
- 5%
0% 5% 10% 15% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 GSP Growth Personal Income Growth Wages Growth GF Revenue - Excl 2019 Bien OTO
GF Revenue more volatile than the Economy
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Revenue Estimate
Driving Through the Noise
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2021 Biennium Ongoing Growth by Major Source
- Individual income tax
growth contributes about 2/3 of total general fund growth
- Corporate Income Tax and
Oil and Gas are relatively flat 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% FY 2019 FY 2020 FY 2021 Individual Property TCA Interest Earnings Remaining Sources 3.7% 4.2% 3.0%
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Oil & Natural Gas Revenue Stable
Price stability Slightly declining production
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Price of Oil
- November IHS Markit
forecast incorporates recent oil price decline
$0 $20 $40 $60 $80 $100 $120 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 $/bbl
West Texas Intermediate Oil Price, November IHS Markit data
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Short – Term Interest Rates
0% 1% 2% 3% 4% 5% 6% 7% 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
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General Fund % Growth (excludes 2017 sessions OTO)
9.1%
- 0.3%
- 1.5%
10.8% 10.8% 11.6% 7.1% 6.8%
- 7.5%
- 10.0%
9.6% 5.0% 11.0% 0.0% 5.9%
- 3.6%
1.0% 9.0% 3.7% 4.2% 3.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
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Risks: Tax Payer Choices Economic Uncertainty
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Short-Term Risk: Revenue Uncertainty Taxpayer Choices & Federal Tax Law
Anticipate Timing Actual income Fiscal Year Revenue
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CY 2014 / FY 2015 CY 2015 / FY 2016 CY 2016 / FY 2017 CY 2017 / FY 2018 CY 2018 / FY 2019 CY 2019 / FY 2020 CY 2020 / FY 2021 CY 2021 / FY 2022 Bonuses Profits
Possible Impact from Taxpayer Behavior: Slump and Lump in the Snake
“Normal”
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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
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