"Once abolish God and the government becomes the God." -G.K. Chesterton

Monday, April 12, 2010

About That Recovery, Sales Tax Receipts Show Otherwise: Consumer Spending Down 14 Straight Months

As someone who closed a retail furniture store earlier this year, I can tell you from personal experience how low consumer confidence in Texas is right now. My store experienced a 40% drop in revenue from 2008 to 2009, including a dismal 70% drop during the month of August when cash-for-clunkers was introduced. This was in Austin, Texas, which Time magazine recently lauded as one of the best cities to do business and one of the least affected by the recession.

So what gives? Where are all these confident shoppers? Could it actually be that Obama's policies are killing the chance for a recovery? The evidence suggests that the president has made the recession worse, not better. He has created economic uncertainty tilting the flow of money from the private sector into government and keeping consumers at home. I'm just one of many small business casualties of his poor ecoomic policies.

When Obama talks about helping small businesses, trust me, it's just talk. Every tax credit he has introduced is worthless to businesses cutting back, and no small business owner is going to borrow money they don't have during times of economic uncertainty and sporadic revenue just to save a few thousand dollars in taxes they probably won't have to pay anyways - because they are losing money!

The mainstream media has hold us for nine or ten months now that the recession is over, that we are turning the corner and shoppers are beginning to spend again. Often these reports cite increases in same-store sales, but don't be fooled. This is a mirage. When big chains close stores, nearby stores see a sales boost. That's not due to an increase of shoppers, just a redistribution of them.

There has been no uptick in consumer confidence, and the strongest evidence of this is the continued decline in sales tax receipts. This year's March revenues from sales tax for the state of Texas were down 8% from last March. Let me emphasize that. March of 2009, during what was considered the height of the recession was better for businesses than March of 2010. In fact, sales tax receipts in Texas have been on the decline for some time now, and eight of the previous months saw double digit decreases.

As the Austin-American Statesman reports:

A closely watched indicator of Texas' fiscal health, the state's sales tax revenue is now $1.5 billion below where it was at the same time last year, the figures showed.
Even so, state officials say they have not yet decided to pull the trigger on proposed agency budget cuts, aimed at saving about $1 billion in the current two-year budget.
The $1.46 billion collected from February sales — and remitted to the state in March — was 7.8 percent less than the amount brought in during the same month a year ago.

Here's a chart of Texas sales tax receipts. Keep in mind March brings in a lot of tourists, including spring breakers and SXSW participants to Austin, so it should be up considerably. These numbers are disappointing to say the least:

Of course the liberal Statesman is selling it as a "softening." They might also want to note that Austin construction companies "softened" paychecks by firing 2300 people last month. Somebody tell Newsweek.

Hat tip to Mish.

No comments:

Post a Comment