State economist Corey Miller told the Joint Legislative Budget Committee at their hearing on September 24 that the state is positioned for relatively strong growth in 2021, even though forecasts are continuing to temper expectations.
He said that the IHL’s University Research Center estimates that state’s real gross domestic product will grow by 5.5 percent, the largest annual increase for the state since 1994. In 2022, the URC forecasts an increase of 0.9 percent, a return to pre-recession increase. Payroll unemployment is also expected to increase by 1.8 percent in 2021, the largest increase since 1998. But like GDP, he expects payroll growth to slow to 0.5 percent in 2022.
He said numbers from the National Bureau of Economic Research show that the 2020 COVID-19-related recession was deep, but the shortest on record in U.S. history, lasting from February to April 2020.
Miller also said the end of extended unemployment benefits by several states, including Mississippi, will likely not lead to increased employment.
He also said that supply chain issues such as a global shortage of semiconductor chips, concern over the Delta variant of COVID-19, inflation and other factors will result in more time for the nation’s economy to return to complete pre-pandemic levels.
“In summary, the U.S. and Mississippi economies continue to recover, although this recovery remains uneven,” Miller said to the committee. “Service sectors, which involve more interpersonal contact, continue to lag production sectors as consumers take precautions following the rise in COVID-19 cases due to the Delta variant.
“We expect relatively strong growth in 2021 before a deceleration to near or slightly above pre-recession trends in 2022. As has been the case for over a year, the virus and society’s responses to it continue to dictate the trajectory of the recovery.”
Numbers from the Legislative Budget Office show an improving economy. In the last revenue report from the Mississippi Department of Revenue for August, sales tax revenue increased by 54.25 percent, going from $276 million collected in June and July of 2020 to this year, when the DOR collected $424 million, an increase of $149 million.
Use tax was also increased, but the so-called sin taxes on tobacco and alcohol were down by 5.61 percent, shrinking by $2.72 million from $48.4 million in June and July of 2020 to $45.7 million this year.
The unemployment rate also dropped from 6.2 percent to 6.1 percent in July, still below the U.S. average of 5.4 percent. State gross domestic product was also up in the first quarter of 2021 by 6.8 percent.
Using tax collections as a guide, Mississippi’s economy was on the upswing before the COVID-19 pandemic, as total collections for fiscal 2018 added up to $5.69 billion and increased to $5.97 billion in fiscal 2019. In fiscal 2020, collections decreased to $5.82 billion before increasing to $6.74 billion in fiscal 2021, which ended on June 30.