Consensus Economic Revenue Forecast Fy22

NEW YORK CONSENSUS
FORECASTING CONFERENCE
Hon. Liz Knic&CT Robert. F. Mujiea Ir Hon. Helene E. Weuweio
Chair Dircclflf Chair
Senate Finance Committee NYS Division or I.he B11Cl1et Assembly W1)'1 end MCIIII Committee
Hon. Tom O'Man Hon. l!d Ra
Rankins Minority Member Ranking Minority Member
Senate Finance Commincc Assembly W1)'1 and MCIIIS Committee
MEMORANDUM
TO: Governor Andrew M. Cuomo March 1, 2021

Senator Andrea Stewart-Cousins
Assemblyman Carl E. Heastie
Senator Robert G. Ortt
Assemblyman Will Barclay
FROM: Robert F. Mujtca,;r. (ff},,

David Frleclfel ~ . t
Blake G. Washington ~
Shawn MacKlnnon~
Lauren O'Hare
SUBJECT: Consensus Forecast Report
Attached please find the FY 2022 "Consensus Economic and Revenue Forecast Report11 as
required by Section 23 of the State Finance Law.
Attachment
1
ECONOMIC AND REVENUE CONSENSUS REPORT FY 2022
This report contains the results of the consensus economic and revenue forecasting process
conducted by the Executive and the Legislature in advance of the enactment of the FY 2022
Budget, pursuant to the provisions of Chapter 309 of the Laws of 1996.
The Consensus Forecasting Conference was held on February 24, 2021. Based on the
testimony of experts at the Conference, the baseline outlook for both the economy and revenue
remains highly uncertain and wlnerable to the effects of the COVID-19 pandemic. However, the
national and State economies are expected to continue the current recovery path, both of which
benefit from the increased availability of vaccines as well as substantial federal stimulus aid and
supportive monetary policy.
Economic Forecast Review
The economic forecasts contained in the Executive Budget and Legislative reports portray
recovering national and State economies for both the 2021 and 2022 calendar years. It is important
to note that all parties' forecasts were completed prior to the February 24 Consensus Forecasting
Conference.
AJI parties agree that the national economy, as measured by inflation-adjusted Gross
Domestic Product, will recover robustly in 2021, following an unprecedented 3.S percent decline
in 2020. The consensus forecast for U.S. real GDP growth for 2021 is S.7 percent, inclusive of
additional federal fiscal stimulus, followed by growth of3.7 percent for 2022.
All parties expect national employment growth to continue to recover. The consensus
forecast calls for employment growth of 2.8 percent in 2021 and 3.6 percent in 2022, following a
dramatic decline of S. 7 percent in 2020. All parties expect a higher rate of consumer price inflation
for 2021 and 2022, as measured by the Consumer Price Index. All parties consent to an inflation
rate projection of 2.3 percent for 2021 ~d 2.4 percent for 2022. Consistent with expectations
pertaining to both employment and inflation, all parties consent to a wage growth projection of 6.7
percent for 2021 and S.2 percent for 2022, following growth ofjust 0.6 percent for 2020. Similarly,
all parties consent to a personal income growth projection of S. 1 percent for 2021 and a decline of
0.6 percent for 2022, following growth of 6.3 percent for 2020. The consensus forecast for U.S.
corporate profits with capital consumption and inventory valuation adjusbnents included, calls for
a recovery in 2021 with growth of 6.4 percent in 2021 and 5.1 percent in 2022. All parties agree
that the yearly yield on 3-Month Treasury bills will average 0.2 percent in 2021 and 0.3 percent in
2022, based on the parties' baseline forecast assumptions.
2
CONSENSUS U.S. FORECAST

CALENDAR YEAR
Perceat Cbaaae
ilmlQ:Ull
REAL GDP 5.7 3.7
PERSONAL INCOME 5.7 (0.6)
WAGES 6.7 5.2
CORP PROFITS U 5.1
NONFARM EMPLOYMENT 2.8 3.6
3-MONTH T-BILL RATE 0.2 0.3
CPI 2.3 2.4
The parties agree that payroll employment in New Yorlc State wiU increase by 8.8 percent
in fY 2022, following a dramatic 12.1 percent decline in FY 2021. The consensus forecast for
personal income growth is 6.S percent for FY 2021 and 2.8 percent for FY 2022. The consensus
forecast cal1s for wage growth of 6.4 percent for FY 2022, following a decline of 2.6 percent for
FY2021. .
CONSENSUS N.Y. FORECAST

FISCAL YEAR
PuentCbqe
.D:JJlll a.ma
NONFARM EMPLOYMENT (12.1) 8.8
PERSONAL INCOME 6.5 :U
WAGIS (2.6) U
Note: The Senate and Auembly Minority coaatnct tbetr peno■al
Income and waae aerla baHd oa BU data, wbereu all other
parties •ae NYS Departmeat or Labor QCEW d1t1; tbe two 1erles
caa deviate 1ab1taad1Uy from one another.
All parties agree that there are multiple and elevated risks to the economic outlook for the
national and State economies. Any unanticipated setbacks to the ongoing efforts to contain the
spread of the Coronavirus, and therefore the sustainable re-opening of all sectors of the economy,
will continue to be a significant downside risk to the economic and revenue forecasts, as it directly
impacts the financial markets, global supply chains and trade.
In contrast, a quick resolution of the Coronavirus pandemic, both domestically and

internationally, will lead to stronger growth in output, employment, wages, and corporate profits
than reflected in the consensus forecast.
Risks to both the national and the New Yorlc forecasts also stem from monetary and fiscal
policy actions. Higher interest rates than reflected in the consensus forecast could hamper the
housing recovery and reduce business investment and hiring. As the world's financial capital,
New York could be negatively affected should interest rates materially deviate from the pace that
is reflected in the consensus forecast. All parties identify the financial market outlook as critical
for the health of the State economy and the underlying tax base. The impact of the federa1 tax law
changes on taxpayer behavior, especially the state and local taxes (SALT) deduction limitation,
3
will continue to present a major source of risk to the State's housing market, especiaUy in certain
downstate markets. In addition, all parties agree that the spread of the Coronavirus has
substantially impacted the commuting and teleworking patterns of workers with implications for
the economic and fiscal outlook of the State.
Revenue Forecast Review
Section 23 of the State Finance Law defines receipts subject to consensus as the combined
total of All Funds tax receipts, General Fund miscellaneous receipts, and lottery revenues. The
revenue estimates from all parties for FY 202 t and projections for FY 2022 exhibited significant
variance, but participants reached consensus on a two-year revenue total that is $2.453 billion
above the Executive Budget estimate.
In addition to the risks mentioned above, the following risk factors could affect actual results
during the next 13 months:
• the growth in financial sector bonus payments in the first quarter of calendar year 2022;
and,
• the timing of the ongoing economic recovery and the efforts to contain and, hopefully,
eradicate, the Coronavirus as a threat to the national and State economies.

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NEW YORK CONSENSUS

TO: Governor Andrew M. Cuomo March 1, 2021

FROM: Robert F. Mujtca,;r. (ff},,

SUBJECT: Consensus Forecast Report

ECONOMIC AND REVENUE CONSENSUS REPORT FY 2022

Economic Forecast Review

CONSENSUS U.S. FORECAST

CONSENSUS N.Y. FORECAST

In contrast, a quick resolution of the Coronavirus pandemic, both domestically and

Revenue Forecast Review

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