Pardon me while I wipe this egg off my face and eat some humble pie.
After seeing sales taxes plunge about 8% last month, I wondered out loud if the top was in. If the never-ending money train was about to come to a screeching halt. The U.S. is officially in recession, after all.
Nope. UP 11% for July.
So where was the error in my thinking?
Also, the latest CPI number was UP about 8.5% YoY and we know that number is pretty much bullshit as the reality is much higher. If you use the CPI formula from the 1980s, inflation is more like 12% to 15%. So to see our sales tax receipts UP 11% YoY is pretty much in line with that.
So I guess the REAL question is how the hell sales tax numbers for JUNE actually DROPPED 8%?? That is a huge move and clearly a big outlier now. I need to go back and see the actual numbers from last year. Was last June a huge outlier to the upside or was this June way down for some reason?
Although I am eating crow right now, I stand by my assertion that Spring Ho had nothing to do with the most recent sales tax increase – because we also had Spring Ho last year, and I highly doubt that approximately $330,000 more (8% of $330k = the $26,000 increase between last July and this July) dollars were spent this Spring Ho versus last year. It is purely due to inflation – especially in the gasoline area – which is UP 20% over last July.
Only thing to do now is try and find details on the 8% drop in June 2022 and see what caused it. I have no clue what it could be.
**UPDATE #2 – 9/9/22 **
Looking at last June’s $252,670, it looks high compared to the months around it. Why was June about $20k high last year? Hell if I know. All seasonal effects should be accounted for as these are always YoY comparisons. Maybe everyone bought a shit ton of repair hardware after the Freeze of the Century last year? Simultaneously, this June’s numbers look kinda low by about $10,000 compared to surrounding months. Economic slowdown?
So it looks like a bit of both: slightly higher than normal last year and slightly lower this year. But July of THIS year rebounded strong in a MoM comparison while July of 2021 saw a big DROP MoM compared to June 2021.
So what I did was combine months into two-month blocks to smooth things out a bit to see if there are any clues as to where receipts may be heading. Here are the results:
May/June 2021 versus May/June 2022 – the increase is only 1.3% YoY ($465k versus $471k)
June/July 2021 versus June/July 2022 – the increase is only 1.5% YoY ($490k versus $497k)
July/Aug 2021 versus July/Aug 2022 – the increase is 11.5% (461k versus $513k) – receipts have picked back up. Increase for Texas as a whole was 13% YoY for August.
Contrast that to earlier in the year:
I compared March/April 2021 with March/April 2022 and the increase was significant: $403,000 versus $444,000 or a TEN PERCENT increase YoY – which is more in line with “official” inflation.
Then I moved to the April/May combined month comparisons. We see it slow a bit to 8% YoY ($459k versus $496k).
So as we move down the calendar from March/April and compare two-month blocks of receipts, we see: up 10%, up 8%, up 1.3%, up 1.5% and up 11.5%
Slowdown has disappeared – back to double digit increases.