What better way to measure retail sales than by looking at sales tax receipts? As John Mauldin notes in his column this week, a number of states are struggling in that regard:
So, what do taxes tell us about the retail sales numbers? We can’t look to income taxes, but we can look at sales taxes. And they confirm that consumer spending is indeed slowing. Philippa Dunne and Doug Henwood at The Liscio Report track sales tax receipts in the various states. This week they write:
“State sales tax collections continue to fall relative to budgetary projections. In September, just 37% of the states in our survey met their forecasted sales tax collections, down from 51% in August. A few contacts reported exceeding their projected collections by 1-2%. The majority, however, reported wide misses, the worst of these coming in 7-8% below where they thought they would be. Large states on both coasts reported year-over-year declines of around 2%, and in the Midwest, where results were weakest, collections in one state fell 11% over the year. Collections in three states in the “made it” column are hovering at the very low end of the tolerable range.
And our contacts believe it’s real; some have lowered their growth projections for the coming year, others are close to making that decision, and some have recently decided against raising projections. The states with previously hot housing markets see ample reason to believe they have their culprit. Local reports indicate slowing sales and falling prices. Our contacts in these states also pointed out reports of people walking away from their down-payments, and wondered how many aren’t putting their houses on the market because they would basically have to bring a check to the closing. (A contact of ours who’s a mortgage banker in the formerly hot South Florida market reports: ‘The market has evaporated. Even the affordable stuff can’t be given away. The Desperation among developers, bankers, and speculators is palpable.’)”
