The Great Recession negatively impacted state revenues from 2009-2012.
Recovery from 2012 onward correlated with national economic recovery, with low inflation causing relative revenue spikes in 2015.
Federal spending impacted general revenues from 2020 to present.
The Great Recession, beginning in 2007, impacted MO revenue in several ways. The weak stock market caused a decline in capital gains income and a reduction in income tax revenues (Kruckemeyer 2009). In 2009, MO lost more than 97,000 jobs and unemployment rose to 9.3%, which also contributed to reduced income tax revenues (Bureau of Labor Statistics 2010). Wage growth also dropped sharply, from just under 5% per quarter from 2007-2009 to less than 2% in the first quarter of 2009, further reducing income tax revenue (Kruckemeyer 2009). From 2008 to 2010, MO general revenue was reduced by $920 million in income tax revenue, $210 million in corporate tax revenue, and $220 million in sales and use tax revenue, not accounting for inflation (MO Senate 2008, MO Senate 2010, Figure 1).
MO was one of five states that worked to reduce its income tax following the Great Recession in 2009 (Johnson et al 2010). These reductions came from the creation or expansion of tax credits and income tax exemptions (Jennemann 2022).
In addition, outstanding tax credits owed to businesses contributed to decreases in corporate tax revenue during this period (Kruckemyer 2009).
From 2009 to 2020 the U.S. saw the longest economic expansion on record (Center on Budget and Policy Priorities 2022). MO mirrors this growth with increased general revenue from 2012 through 2017, followed by slight dips in 2018 and 2019 (Figure 1). Unemployment fell slowly during this period but reached a national rate (3.5%) that had not been seen since 1969. In MO, unemployment fell from 8.4% in 2011 to 3.3% in 2019 (Bureau of Labor Statistics 2013, Bureau of Labor Statistics 2020).
Wages across the country saw growth in 2015 and 2015, in part because of low inflation (Center on Budget and Policy Priorities 2022). This can be seen as a psike in inflation adjusted dollars for Missouri revenue in 2015 (see History of MO Taxes). This entire period saw relatively low inflation, with most years lower than the 2% target set by the Federal Reserve (Bureau of Labor Statistics 2025).
National employment losses in 2020 wiped out large shares of the gains from 2010-2019 (Center on Budget and Policy Priorities 2022). However, national recovery was much stronger and faster than the Great Recession, as a result of federal stimulus spending through the CARES and American Rescue Plan (National Bureau of Economic Research 2021, Center on Budget and Policy Priorities 2024). The unemployment rate in Missouri was 3% at the end of 2023, down from 6.2% in 2020 and lower than its 2019 rate (3.2%) (Bureau of Labor Statistics 2024a, Bureau of Labor Statistics 2024b , Bureau of Labor Statistics 2024c).
Despite strong recovery and employment, inflation increases in 2021 undercut the impact of increased revenue History of MO Taxes for inflation adjusted numbers) (Center on Budget and Policy Priorities 2024). In 2021 inflation increased to 4.7% from the previous year, reached its height in 2022 at 8%, before falling to a projected 2.9% by the end of 2024 (Federal Reserve Bank of Philadelphia 2024, St. Louis Fed 2025).
Figure 1. Missouri fund sources and tax rates. The bars represent sources of General Revenue (GR) as a portion of the total GR in each fiscal year (left axis) not adjusted for inflation. For inflation adjusted graph see History of MO Taxes. The lines show the tax rates for these income sources. Data was collected from the MO Senate Annual Fiscal Reports (2004-2022, see references), the Missouri Department of Revenue Income Tax and Corporate Income Tax forms (2005-2023, see references), the Tax Foundation’s State Individual Income Tax Rate Tables (2005-2012), and the Missouri Department of Revenue’s Sales/Use Tax Rate Tables (2005-2023).
References
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