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Revenue & Economic Update

In between each Budget & Economic Forecast, we also prepare a quarterly Revenue & Economic Update in January, April, July and October of each year. The Revenue & Economic Update reports on how actual revenue collections for the current year compare to the previous forecast as well as provide notes on changes in the national and state economic outlook.


Latest: January 2017 Revenue & Economic Update

January 10, 2017

Read Complete Document (pdf)

QUICK SUMMARY

Minnesota’s net general fund receipts totaled $3.701 billion during the months of November and December 2016, or $29 million (0.8 percent) less than projected in the November 2016 Budget and Economic Forecast. Lower than expected individual and corporate income taxes offset sales and other tax receipts that were ahead of forecast. The negative variance for the period was primarily generated in December, as November receipts fell only slightly below forecast.

Net individual income tax receipts during the last two months of 2016 were $33 million (1.9 percent) less than forecast. Lower than expected gross tax receipts and larger than forecast refunds generated the negative variance. (See page 3 of complete document for details.)

U.S. Economy. The outlook for U.S. economic growth has improved since Minnesota’s Budget and Economic Forecast was prepared in November 2016. The Bureau of Economic Analysis (BEA) now estimates that real GDP grew at an annual rate of 3.5 percent in the third quarter of 2016, up from 1.4 percent growth in the second quarter. IHS Markit (IHS) Minnesota’s macroeconomic consultant, expects an increase in U.S. economic growth from 1.6 percent in 2016 to 2.3 percent in 2017, driven by continued, moderate growth in real consumer spending and solid gains in business spending on equipment and buildings. The improvement is expected to continue with 2.6 percent annual real GDP growth in 2018, before slowing to 2.3 percent in 2019. The November 2016 IHS outlook projected slightly weaker 2017 growth of 2.2 percent, with growth holding steady at that rate through 2019. The IHS January baseline forecast for 2017 growth is the same as the Blue Chip Consensus, the median of 50 business and academic forecasts. The Blue Chip Consensus expects 2.4 percent growth in 2018, slower than IHS’ 2.6 percent forecast for that year.

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