The Economic and Revenue Forecast Council (EFRC) issued its monthly Economic and Revenue Update today. Once again revenue has come in under forecast.

For the month, General Fund–State collections were $22.1 million (1.7 percent) less than the amount anticipated under the forecast adopted in June. Of this $22.1 million, $4.1 million was an unanticipated refund. Revenue Act sources (retail sales, business & occupation, use, public utility and tobacco product taxes, and penalties and interest) were $53.1 million (6.1 percent) below forecast, while non-Revenue-Act sources were $31.1 million (7.4 percent) above forecast. Property tax accounted for most of the positive non-Revenue-Act variance. The Update is available here.

This disappointing state tax collections report follows Friday’s disappointing national employment report. That report showed that the U.S. economy added only 18,000 jobs in June. The estimates of April and May employment were revised down by 18,000 and 47,000 respectively. As a result, the employment growth rate for the 2^nd quarter is now estimated to have been 1.3 1.4 percent (annualized). This is considerably lower than the 2.0 percent assumed in the EFRC’s June forecast.

Arun Raha, the ERFC’s Executive Director, remains guardedly optimistic: “We continue to believe that this soft-patch is transitory, and that economic activity will pick up in the second half of the year, absent a low probability high impact event.” I certainly hope he is correct. The large shortfall in Revenue Act collections is troubling, however. Seasonally-adjusted Revenue Act collections have now fallen for three consecutive months. And as to high impact events, a sovereign default in Europe is not that improbable.