Federal cash infusion won’t erase Illinois’ chronic fiscal strains

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202104131450SM______BNDBUYER_00000178-cc00-d414-abf8-efa2047e0001_110.1#new_tab


S&P Global Ratings warns of the pressures posed by the Illinois? burdensome pension tab even as it maintains scheduled contributions despite glaring structural woes cited in the recently published three-year budget forecast from the legislature?s non-partisan Commission on Government Forecasting and Accountability.

When applying fiscal 2022 proposed spending levels, the state?s roughly $5 billion bill backlog could jump to $9.9 billion, and $10.6 billion by the end of fiscal 2024, and a $1.2 billion fiscal 2022 deficit rises to $1.9 billion or $2.3 billion if spending grows by five- and 10-year historical rates of 2.7% or 3.2%, respectively.

The numbers look bleaker with the backlog skyrocketing to record levels of between $19.1 billion and $20.5 billion based on a fiscal 2021 spending base.

Author(s): Yvette Shields

Publication Date: 13 April 2021

Publication Site: Fidelity Fixed Income

Economy: Inflation Concerns Are Growing

Link: https://cgfa.ilga.gov/Upload/0221revenue.pdf


It has been over a year since the COVID-19
recession began in February of 2020. After going
through a brutal loss of 31.4% in the second quarter
and an immediate, rapid rebound of 33.4% in the
third quarter last year, the economy appears headed
for a recovery. Overall, the U.S. economy shrank by
3.5% in 2020, compared to 2019. This was the worst
growth since one year after World War II. In
January, personal income rose 10% and consumer
spending jumped by 2.4%, the biggest increase since
June of 2020, both of which mostly resulted from the
COVID-19 relief payments by Congress. Housing
markets are still robust, partly supported by low
mortgage rates.
However, the employment report in January showed
weaker-than-expected data. The unemployment rate
fell to 6.3% from 6.7% mostly due to a decrease in
the labor force (i.e. people gave up looking for jobs).
The economy gained 49,000 jobs, which was lower
than expected. Inflation, currently at 1.5%, is
persistently below the Fed’s average goal of 2%.
Having said that, the outlook on the U.S. economy
has improved as daily COVID-19 infection cases are
falling and more dosages of the vaccines are being
administered. In addition, $1.9 trillion is ready to be
pumped into the economy once a third COVID-19

relief bill passes Congress. However, the recovery
rate will not be as fast as the rate seen in the third
quarter of the previous year.

Author(s): Julie Bae

Publication Date: February 2021

Publication Site: Illinois Commission on Government Forecasting and Accountability