At the start of 2020, the U.S. economy was in very good shape. Unemployment was at an extremely low 3.6%. In the stock market, the DOW was at an all-time high. Missouri’s economy was better than average with strong revenues and an unemployment rate of close to 3.4%. Then Covid hit.
Based on scary predictions from world health officials like the CDC and WHO, government leaders at the local, state, national, and world levels made significant decisions with major economic effects. Stay-at-home orders, “essential” work determinations, and business shut-downs plunged the DOW down 35%, and skyrocketed Missouri’s unemployment to 10.2% and national unemployment to 14.7%. Our governor was forced to withhold millions in planned spending because the money just wasn’t there, most significantly for education. The travel and restaurant industries saw big losses and layoffs. Income taxes normally due in April were delayed, further slowing revenues for state government. But there is now some light at the end of the tunnel.
Surprisingly, while Americans spent a lot less at hotels, theaters, and restaurants, we spent a lot more at big box stores and on home improvement projects. Consequently, sales tax revenues have actually held steady for local and state governments. Income taxes took a sharp dip in the April quarter, but rebounded in the July quarter. Little by little, as the unknowns about Covid have become more known, people returned to work and we are inching our way back to normal.
The DOW has returned to near pre-pandemic levels, national unemployment has fallen to 7.9% and Missouri’s unemployment has dropped to 4.9%. A couple weeks ago, Governor Parson announced that revenues had improved enough to release about $100 million in spending for education, including scholarships to assist our most deserving students. All of this is something we haven’t seen a lot of in 2020 – good news.
Until next time, health, happiness and prosperity to you and your family.