The $1.9 trillion legislation known as the American Rescue Plan Act passed the House today and will probably be signed ASAP by President Biden so today’s update has some information on the expected economic impact. Also, more Johnson & Johnson vaccine doses have been purchased, Illinois House members return to Springfield, and how the new CDC guidelines can impact your business.
We have a busy end of the month as far as our calendar goes. Our State of the City Address with Joliet Mayor Bob O’Dekirk is back on the calendar for Monday, March 22 at 11 AM. Make sure to sign up here.
Please add the Women’s Empowerment Forum on Wednesday, March 24th. In honor of National Women’s History month the chamber has partnered with Lewis University and invites you to join an interactive, virtual, open forum with women educators and leaders from our community. Join us at 2:30 PM by registering here: http://jolietchamber.chambermaster.com/events/details/2021-webinar-march-24th-women-s-empowerment-forum-6018
Also, you can now register to join us for a Joliet City Council Candidate forum to take place on Thursday, March 25th. We’ll have an in-person event that will be taped and released immediately as well as a published questionnaire before the 3/25 event. This event will run from 11:30 AM to 1:00 PM. You can register here: http://jolietchamber.chambermaster.com/events/details/2021-member-lunch-march-25-joliet-city-council-at-large-candidates-6027
*Daily Coronavirus update brought to you by Silver Cross Hospital
Latest Stimulus Package Could Jolt U.S. Growth, Revive Inflation in 2021
The nearly $1.9 trillion relief package heading for House passage Wednesday is projected to help propel the U.S. economy to its fastest annual growth in nearly four decades, reduce poverty and revive inflation.
The legislation—following trillions of dollars in federal aid last year and arriving amid rising Covid-19 vaccination rates—prompted economists surveyed by The Wall Street Journal in recent days to boost their average forecast for 2021 economic growth to 5.95%, measured from the fourth quarter of last year to the same period this year. That was up from their 4.87% projection last month and would be the U.S. economy’s fastest since a 7.9% burst in 1983.
The analysts also lifted their forecasts for inflation and job growth from last month’s survey. The new poll found that they expected consumer prices would rise 2.48% by December from a year earlier and projected that employers will add an average 514,000 jobs a month over the next four quarters.
Some economists warned they might be underestimating the bounce to come. “The impact of the $1.9 trillion relief package could well ignite faster growth than we anticipate,” said Constance Hunter, chief economist at KPMG.
President Biden’s Covid-19 aid bill adds to considerable tailwinds that have already produced a faster-than-expected recovery from last year’s collapse in economic activity amid restrictions to contain the coronavirus. These include roughly $4 trillion in spending that Congress authorized last year to combat the pandemic, easy-money policies by the Federal Reserve and—most important—an expected reopening of businesses and schools as the population is vaccinated against Covid-19.
“It’s unprecedented,” Oxford Economics chief U.S. economist Gregory Daco said of the fiscal response to the pandemic. He expects the latest legislation to add 3 percentage points to U.S. GDP growth this year, and between 3 million and 3.5 million jobs.
The new outlook, if it materializes, would defy policy makers’ and business executives’ expectations last year that the economy’s path was likely to resemble Nike’s “swoosh” logo—a sharp drop followed by a long and grueling recovery. It also contrasts starkly with the aftermath of the previous recession when employers shed 8.7 million jobs between 2008 and 2010 and took more than six years to add them back.
The coronavirus pandemic led to the loss of 22 million jobs between February and April of last year. Nearly 13 million of those jobs have been recovered. Treasury Secretary Janet Yellen said Monday that she expects the U.S. labor market will return to its pre-pandemic health by next year. “There are no benefits to enduring two historic economic crises in a 13-year span, except for one: Our mistakes are fresh in our memories. We can learn from them,” Ms. Yellen said in a speech Tuesday, outlining the case for a more muscular fiscal response than occurred after the 2008 financial crisis.
The forecasts aren’t without risk. Economists surveyed by the Journal warned that a mutation of the virus resistant to available vaccines, or a slowdown in the pace of vaccinations, could alter the outlook. The looming demand surge has also fueled concerns that high inflation could follow, forcing the Federal Reserve to raise interest rates in response. That could deal a setback to the economy and labor market before a complete recovery is achieved.
“There’s a real possibility that within the year, we’re going to be dealing with the most serious incipient inflation problem that we have faced in the last 40 years,” former Treasury Secretary Lawrence Summers said in late February.
Fed officials acknowledge that annual inflation is likely to jump in the coming months, as the economy picks up and ultralow readings from March and April of 2020 fall out of 12-month price indexes. There is also a possibility that a spending surge after the economy reopens, or supply-chain bottlenecks, could cause some prices to rise faster than normal. But decades of slowing inflation—the consequence of globalization, technological advances, and aging populations—in rich countries prompted the Fed last year to ditch its longtime practice of raising interest rates to pre-empt higher prices. Now, policy makers plan to wait until inflation hits their 2% target and is expected to remain above it for some time before they will contemplate interest-rate increases.
Of the economists surveyed, 80.6% said they expect inflation to rise above the Fed’s 2% target for a period of time due to the latest relief package. But 85% also don’t see the Fed raising interest rates until 2022 or later. Economists in the Journal survey said they see annual inflation rising to 2.8% by the middle of this year, then falling gradually after that. “Inflation will reach levels rarely experienced over the past decade, at close to 3% in mid-2021, but uncontrolled overheating isn’t likely,” said Mr. Daco.
What the Federal COVID Relief Package Means for Illinois—and What it Doesn’t
How will Illinois use the money coming from the Federal Government? Here are the answers directly from State Comptroller Susana Mendoza:
1) Before we spend money on anything else, any stimulus money that comes to Illinois is earmarked to pay back money we borrowed from the Federal Reserve for the state’s COVID and other medical expenses during this pandemic.
Sometimes legislators hear there’s new money coming and get excited about ways to spend it. That’s why I’ve been so vocal in warning that, “No, that money is spoken for.”
The General Assembly authorized borrowing up to $5 billion. I told Governor Pritzker I would only sign off on $2 billion of borrowing because I would not support borrowing more than we could afford to pay back. And I wanted his commitment that any stimulus would go first toward paying back that borrowed money. He agreed.
I used that $2 billion to pay down Medicaid bills for which we get a federal match, allowing me to pay down $3.4 billion worth of Illinois’ bills, essentially stretching the value of that tax dollar as much as possible. That’s the responsible approach I have always taken as comptroller.
2) After we pay the debts, other stimulus money will plug the holes created by the prior presidential administration’s mishandling of the COVID-19 pandemic. Had the advice of experts been followed earlier, the pandemic would have cost far fewer lives and wrought far less havoc on Illinois jobs and businesses than it did.
Restaurants and hotels were closed and not paying sales taxes. Employees were laid off. Not only were they not earning a paycheck and not paying personal income taxes to the state, but people also who’d never had to seek unemployment benefits had to file for the first time and avail themselves of other state services. The state had less money coming in and more demand for services. It was a double-whammy to the people and to the state budget, and it will take years to recover.
The long-term medical expenses from COVID survivors like my brother the Chicago Police Detective Sergeant, who my family is trying to nurse back to health, will unfold over time. For the uninsured, the costs are staggering and will ultimately be passed on to the state. Our friends and family who have lost their homes or their jobs will need more government help than states have budgeted for.
3) Illinois has been more transparent than any other state in spending the stimulus money we have received so far. Newspapers in Florida, Washington and Pennsylvania have all pointed to my Covid-19 Transparency Portal, showing how every penny of Illinois’ $3 billion in stimulus money so far has been spent, as a national model their states should emulate. I’m committed to keeping Illinois taxpayers informed of how their tax dollars are being and will be spent.
4) Before the pandemic, I proposed legislation that would require Illinois to set aside money into a rainy day fund, like other states do, as soon as our backlog of bills is down to a 30-day cycle. Currently, Illinois’ rainy day fund would finance state operations for about 30 seconds. Gov. Pritzker welcomed my initiative as a step toward responsible budgeting. The bond-rating agencies have cited our lack of a rainy day fund as a concern.
I took office during the worst fiscal crisis in the state’s history, after the previous governor ran up a record eight credit downgrades. My goal is to get the state’s finances back on a responsible track to the point that the rating agencies start giving us upgrades. That will take discipline. One ratings analyst told Governing magazine my commitment to paying the state’s bills has been comforting to them as they decide how to rate Illinois’ creditworthiness.
5) From 2015 to 2019, Illinois taxpayers sent $16.4 billion more to the federal government than they got back in federal spending. Illinois has dutifully served as a top donor state, helping some of those same dependent states whose senators now mislabel this stimulus as a “bailout.” The stimulus package is the federal government’s attempt to help Americans in every state.
US to Purchase Additional 100 Million Doses of Johnson & Johnson Vaccine
President Joe Biden is expected to announce Wednesday that the United States will procure an additional 100 million doses of the single-dose Johnson & Johnson coronavirus vaccine, a White House official said. Biden will make the announcement at a meeting with the chief executives of J&J and Merck & Co later in the day, the official said.
The news comes more than a week after Biden announced that Merck and Co Inc will help make rival J&J’s single-shot COVID-19 vaccine in a partnership. Merck’s collaboration with J&J comes after Merck scrapped development of its own COVID-19 vaccine candidates in January.
The U.S. government is invoking the Defense Production Act in order to equip Merck’s plants to be able to produce the J&J vaccine.
Here’s What New CDC Guidelines Mean for Your Business
On Monday, the CDC announced long-awaited changes to its guidelines for people are fully vaccinated against Covid-19, allowing them to gather indoors with other vaccinated individuals. The guidelines also note that vaccinated people can be indoors with unvaccinated people from a single household, in which individuals are at low risk for contracting a severe case of Covid-19. Vaccinated people can also refrain from quarantining and testing following a known exposure if asymptomatic, says the CDC.
For businesses, the guidelines give employers a stronger reason to ensure their workforces get vaccinated, as it may mean a quicker return to a degree of normalcy–and that could prompt more employers to mandate vaccinations, says Jill Chapman, senior performance consultant for Insperity, a provider of human resources and business performance solutions. Chapman notes that companies do need to consider vaccine availability and hesitancy, as it’s unlikely that all employees will want to be vaccinated and that accommodations will need to be made.
This is the first set of public health recommendations for fully vaccinated people and it comes at a time when officials are determining the best way to reopen businesses as people continue to get vaccinated and cases and deaths decline. While the CDC itself has warned against loosening restrictions too quickly, states such as Mississippi and Texas have lifted mask mandates and rolled back in-person business restrictions. The new guidelines note that masking and social distancing are still an essential part of containing the spread of Covid-19 and that fully vaccinated individuals should also avoid medium- and large-size in-person gatherings, get tested if they experience Covid-19 symptoms, and follow CDC and health department travel requirements and recommendations.
Perhaps most important, the guidelines urge individuals to follow guidance issued by individual employers, which may include vaccine mandates. This poses the question of how employers will choose to collect this information: physically by accepting a copy of or looking at their vaccine card, through an electronic record, or through the use of a vaccine management system.
It also serves as an early test of vaccine passports or “vax passes,” which contain a record of a person’s vaccination status on a mobile device. As more workers get vaccinated and in-person business resumes in greater capacity, some businesses may increasingly ask customers to present their vaccination records upon entry. Doing so has to this point been discouraged, as some information such as when a person was vaccinated may unintentionally reveal confidential medical information such as a pre-existing condition.
“While we do not expect all venues to require vaccines, we do foresee a requirement of either providing vaccination proof or Covid-19 testing verification until the risk of infection decreases,” notes Judi Korzec, CEO VaxAtlas, a platform that helps manage and keep medical records and other vaccinations.
The CDC’s guidance will be updated and expanded based on the level of community spread of Covid-19 and the proportion of local populations that are fully vaccinated. So even if it’s too soon to change your own company’s policies, it’s important your business remains updated on the latest guidelines.
COGFA Releases 2021 and 2022 Reports for Illinois
The bipartisan Commission on Government Forecasting and Accountability released its revenue recap for fiscal year 2021 and a budget estimate for fiscal year 2022 in a meeting Tuesday. In short, COGFA said fiscal year 2021, which runs from July 1, 2020, to June 30, 2021, performed better than was expected in the gloomy forecast changes from the beginning of the pandemic.
“There are a number of reasons for the better-than-expected performance: enhanced unemployment benefits serve to support withholding taxes off of what could have been much lower levels; employment levels quickly improving off of initial lows related to the virus’ impact; and ability of individuals and companies to quickly adapt to working-from-home protocols,” according to the report.
The failure of the graduated income tax removed $1.2 billion from the FY21 picture, however. For FY21, total General Revenue Funds were 43.5 billion, according to the report.
For fiscal year 2022, the projection is $40.39 billion, a more than $3 billion drop. But the 2021 number includes $2 billion in federal borrowing, which is a one-time revenue stream that must be paid back. Income tax revenues were higher in FY2021 than FY2020, due to a delay in income tax filing, according to the report.
We’ll have more on state budget projections as the session moves forward, especially as the federal government nears passage of another COVID-19 stimulus package that could net the state more than $7 billion, according to its U.S. senators.
The FY22 revenue estimate is also less than the one put forth by the Governor’s Office of Management and Budget by $1.4 billion. But the governor’s plan includes changes to state law, especially regarding to the corporate tax code, that lawmakers must approve.
COGFA’s estimate went by current laws, not factoring in those proposed changes, which include “$932 million of ‘tax expenditure/loophole closures’ and $565 million of redirected revenues from existing streams,” according to the COGFA report.
You can find the full COGFA report by clicking here. The report is also attached to this message.
Illinois House Back to Springfield … For One Day
House Speaker Emanuel “Chris” Welch has called his chamber back to Springfield for one day next week to tackle at least two bills that need floor action. Lawmakers will get as much work done as possible March 18 and will continue virtual hearings for other days of the week (Tuesday, Wednesday, and Friday), Jessica Basham, the speaker’s chief of staff, wrote in an email to members.
At least two time-sensitive bills will be up for discussion: HB1871 calls for allocating federal funds from the Help America Vote Act to be used for establishing ballot drop boxes around the state. And HB158, which addresses disparities in medical care and other services in Black communities. It’s being carried by Rep. Camille Lilly and is the last of the four pillars of the Black Caucus agenda. A week is a long way away, so there could be a few more pieces of legislation up for discussion by then.
Program Notices & Reminders
Paycheck Protection Program Office Hours This Week Hosted by the SBA Illinois District Office
The SBA Illinois District Office is here to help you navigate the Paycheck Protection Program! Join them this week for office hours and get your questions about PPP answered. They will be hosting office hours daily until PPP closes on March 31. Sign up for office hours this week below!
Office hours this week
- Thursday, March 11, 1:30p.m., Click here to sign up.
- Friday, March 12, 10:00a.m., Click here to sign up.
Browse other events hosted by the SBA Illinois District Office here.
A Chance to Win $50,000 for Your Small Business – FedEx Grant Contest
The 2021 FedEx Small Business Grant Contest is now open. Entries close March 9, 2021. Before you enter, have your FedEx account number handy. Or create an account if you don’t have one. Now you have a chance to win $50,000 to help you continue growing your business. Enter the 9th annual FedEx Small Business Grant Contest today.
Enter here: https://smallbusinessgrant.fedex.com/enter-now
More info: https://www.fedex.com/en-us/small-business/grant-contest.html?CMP=SOC-1006521-1-16-1003-1111000-US-US-EN-FXALISBGCKIT200&LINK=LEARNGCLI315120
Illinois Department of Commerce & Economic Opportunity Updates and Offerings
EDGE Tax Credit 101 Webinar
Event Date and Time: Wednesday, March 11, 2021 at 10:00 am
About this Event:
Join the Illinois Department of Commerce and Economic Opportunity’s Office of Regional Economic Development for a webinar to learn the basics of the Economic Development for a Growing Economy (EDGE) Tax Credit Program.
Advantage Illinois Loan Program for Small Businesses
Event Date and Time: Wednesday, March 16, 2021 at 10:00 am
About this Event:
Please join the Illinois Department of Commerce and Economic Opportunity’s Office of Regional Economic Development for a webinar to learn more about Advantage Illinois. Advantage Illinois provides Illinois businesses and entrepreneurs with access to the capital to start new companies and expand existing business.
DCEO Veterans Series Presents Illinois Joining Forces
Event Date and time: Thursday, March 18, 2021 at 10:00 am
About this Event:
Join DCEO’s Office of Regional Economic Development and the Office of Minority Economic Empowerment who will host a webinar with Illinois Joining Forces Executive Director Brig. General (Ret.) Steve Curda, Ph.D. and Jim Dolan, Sr. Director of Development with Illinois Joining Forces. Illinois Joining Forces serves as a statewide public-private partnership that promotes the efficient delivery of Growth and Wellness initiatives for Service Members, Veterans, and their Families at the community level throughout the State of Illinois.
Registration Link: https://illinois.webex.com/illinois/onstage/g.php?MTID=e517ad4416d49bac22381e4c3629b01e1
DCEO Angel Investment Tax Credit and Other Assistance Programs
Event Date and Time: Thursday, March 18, 2021 at 2:00 pm
About this Event:
The Illinois Angel Investment Tax Credit Program encourages investment in innovative, early-stage companies to help obtain the working capital needed to further the growth of their company in Illinois. Investors in companies that are certified as Qualified New Business Ventures (QNBVs) can receive a state tax credit equal to 25% of their investment (up to $2 million).
Registration Link: https://illinois.webex.com/illinois/onstage/g.php?MTID=ef818d7e51b16aacb5cc1cedb429010c7
Illinois Department of Transportation
The Illinois Department of Transportation is hosting free virtual workshops in February as part of its Building Blocks of Success series for firms interested in participating in the Disadvantaged Business Enterprise program strengthening their skills and bidding on state projects. The workshops are open to all, but some are tailored to specific districts/regions of the state.
The workshop dates and topics are:
• March 11: Construction Materials Requirements, 10 a.m. to noon
• March 16: Landscape Material and Other Requirements, 10 a.m. to noon
• March 18: Prime Contractors’ Perspective, 10 a.m. to noon
• March 23: Getting Paid, 10 a.m. to noon
• March 25: Required Documents, 10 a.m. to noon
• March 29: Quick Books Part 1, 10 a.m. to noon
• March 30: Quick Books Part 2, 10 a.m. to noon
• March 31: Quick Books Part 3, 10 a.m. to noon
Building Blocks of Success will be conducted through April. Workshop information, including dates and times, will be made available through Eventbrite at bit.ly/DBEworkshops. Advance registration is required. Questions can be directed to the DBE resource center at (312) 939-1100.
Finally, please consider taking a few minutes to fill out the 2021 Small Business Needs Assessment. The Joliet Region Chamber of Commerce in partnership with the Illinois SBDC at Joliet Junior College asks for your assistance in our effort to best serve small business. Your input is extremely valuable and we thank you for your time in completing this survey.
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry