This is a continuation of some work I have been doing to run my own sales tax receipt numbers and therefore correlate what we hear on retail sales. It is increasingly my opinion that the top line retail sales figures that gets reported from one or another reporting agency ShopperTrak, the National Retail Federation, Retail Metrics (exhibit A: http://www.bloomberg.com/apps/news?pid=20601103&sid=aoOJ...) is just another figure like employment, GDP, CPI, that is subject to all manner of manipulation and mis-reporting. Scratching head now to think why I ever considered it otherwise. Of course, you will note the "may have advanced" and the "may have risen" in the article.But facts are facts, and if we go back to the actual reports from the states, if we look at what the sales tax receipts are, how can we have sales up by 2.4%, or by any percent, when sales tax receipts are down by, in some cases, double digit amounts.So here you have some data for your consideration and comment. These are the 8 highest GSP states in the nation. These represent half of the nations total GDP, so I am stopping here. Two of the states I could not find November numbers, or they are not yet released. I don't think you'll find IL and NJ rocketing upwards. In fact if you look at the graph on p.2 of the NJ link provided, you will see that tax receipts are declining across all categories thru Aug, Sept, Oct collections.Recent 2008 2009 %chg sales GSP wgt Source CA-nov 3013 3421 13.54% -2.00% 1847 0.26 http://sco.ca.gov/ard_state_cash_fy0910.htmlTX-nov 1983 1697 -14.42% -14.42% 1223 0.17 http://www.window.state.tx.us/taxinfo/salestax/collections08...NY-nov 764 731 -4.32% -4.32% 1144 0.16 http://www.tax.state.ny.us/collections/monthly_tax_collectio...FL-nov 1545 1451 -6.08% -6.08% 744 0.10 http://dor.myflorida.com/dor/pdf/mcr1109.pdfIL-sept 1019 921 -9.62% -9.62% 634 0.09 http://tax.illinois.gov/AboutIdor/TaxStats/index.htmPA-nov 648 609 -6.02% -6.02% 553 0.08 http://www.portal.state.pa.us/portal/server.pt/community/mon...NJ-sept 727 655 -9.90% -9.90% 475 0.07 http://www.njleg.state.nj.us/legislativepub/snapshot.aspOH-nov 584 588 0.68% 0.68% 472 0.07 http://obm.ohio.gov/ 10283 10073 7092 Avg chg sales -6.46% Weighted chg sales -6.29% I need to add a word about California. In most states, the calculation is simple. If SUT is down 5%, sales are down 5%. You might look at CA and you might think: a bright light. Receipts are up 13.5%. Indeed, that is the rose tinted way it is reported. But CA raised the state tax rate by 1% back in April. So Nov 2008 would be at the old rate, and Nov 2009 would be at the new. It looks like this: CA Nov Projected Sales Nov SUT 2008 48,208,000,000 3,013,000,000 rate in effect: 6.25% 2009 47,186,206,897 3,421,000,000 rate in effect: 7.25% -2.1% 13.5% We know what the Sales and Use Tax collected is. We know what the rate is. We can back out the sales at least as a rough estimate. We find that in the case where rates have gone up, it is possible to report sales tax revenue increases, even while the gross sales number is down.Therefore in my calculation I use (2.1%) for California, which is a WAG, but as it is still better than most of the other states and therefore probably on the high side.A note on Ohio. Yes there was an ever so marginal increase in Nov receipts in OH. This was due entirely to Auto Sales and Use +21%. Non-auto was -1%. To put this in persepective YTD Auto is -1% and YTD Non-auto is -7.8%. So one question for OH is, will the car buying continue? And I think we know what the answer to that is.I'll stop here for now and look for some feedback. Particularly, from those who believe that retail sales are up anywhere from the reported half to two percent in November 2009. I'd like to see some sort of evidence for believing it.
Recent 2008 2009 %chg sales GSP wgt Source CA-nov 3013 3421 13.54% -2.00% 1847 0.26 http://sco.ca.gov/ard_state_cash_fy0910.htmlTX-nov 1983 1697 -14.42% -14.42% 1223 0.17 http://www.window.state.tx.us/taxinfo/salestax/collections08...NY-nov 764 731 -4.32% -4.32% 1144 0.16 http://www.tax.state.ny.us/collections/monthly_tax_collectio...FL-nov 1545 1451 -6.08% -6.08% 744 0.10 http://dor.myflorida.com/dor/pdf/mcr1109.pdfIL-sept 1019 921 -9.62% -9.62% 634 0.09 http://tax.illinois.gov/AboutIdor/TaxStats/index.htmPA-nov 648 609 -6.02% -6.02% 553 0.08 http://www.portal.state.pa.us/portal/server.pt/community/mon...NJ-sept 727 655 -9.90% -9.90% 475 0.07 http://www.njleg.state.nj.us/legislativepub/snapshot.aspOH-nov 584 588 0.68% 0.68% 472 0.07 http://obm.ohio.gov/ 10283 10073 7092 Avg chg sales -6.46% Weighted chg sales -6.29%
CA Nov Projected Sales Nov SUT 2008 48,208,000,000 3,013,000,000 rate in effect: 6.25% 2009 47,186,206,897 3,421,000,000 rate in effect: 7.25% -2.1% 13.5%
Great work duane1x!I think that basing seasonal sales on one day's doorbusters is foolish as your post points out.Short retailers?Jeff
That is a great post btw. The problem I have is that when I look at store SSS they all seem to be up or flat. That may be due to a few things. You close the underperforming stores but you would expect the remaining stores to be flat not up. Or chains are stealing business from Mom and Pop stores who may not have the corporate deep pockets and are already out of business or have less inventory meaning less sales. Last thing I want to add is in my home state of Wisconsin - automobile sales make up 25% of sales tax receipts. If we could extrapolate those purchases out from 08 and 09 you may get even a better view.
<I'll stop here for now and look for some feedback. >Truly excellent work!Wendy
I wasn't clear about what sales you include or excluded.Every state has a unique application of "sales tax" what is included and what is excluded; some states tax groceries some do not, some states have special taxes for certain items, etc etc. I think you are on to something here I'm just not sure how clear a picture you have pulled together relative to the published retail sales numbers.jack
I wasn't clear about what sales you include or excluded.Every state has a unique application of "sales tax" what is included and what is excluded; some states tax groceries some do not, some states have special taxes for certain items, etc etc.What does it matter what's included per State? The point of the exercise is to evaluate YOY changes. One must think that the basics of what is being taxed hasn't changed all that much from year to year so any changes in collections can be thought to pretty well capture changes in sales. Which sales is, IMO, less important than the bigger picture being painted, both by pundits and by private research like the one that started this thread.Considering the discounting going on, the YOY declines in SUT revenues is sobering. Also factoring in (somehow) the declining value of the US dollar and the picture that emerges is not one full of warm fuzzies about the macroeconomic snapshot of US consumption.Since consumption is supposedly accounting for 70% of US economic activity, YOY declines of better than 5% paints a far different picture than the national media would have us view.Poz
What about the anecdotal "massive increase in on-line shopping"? I have no idea how much this would show up in reduced sales tax collections but I can't imagine it is insignificant? Tim <likes this Amazon thingy for gifts to the US> 443 Note: I just post these things, was tempted to not do this one.DAVE’S DITTY:I take exception to saying that Bernanke, Obama and Pelosi are spendingmoney like drunken sailors.When I was a drunk sailor, I quit spending when I was out of money.
Poz,Its the head to head comparison with "retail sales" where I am seeking clarity. I agree with your consumption premise and the warm fuzzy problem.jack
You point out that CA increased the tax rate. It is not the only one.The city of Philadelphia PA had a sales tax increase of 1% from 6 to 7. So the number for PA is even worse than it appears.I don't recall when it went into effect, but I belive it was in the last six months.Mark
I know Washington state, which has no income tax but near VAT level sales tax, has continued declining sales tax revenue.
To respond to some of the ideas that have been put forward:1. comparing SUT data vs reported retail sales numbersI do agree it is not apples to apples. When you begin to look at this type of news lead, you find that some of the quotes come from agenda-driven organizations, into which camp I would put the National Retail Federation and any other organization representing stores or mall owners. We observed the fallacy of this type of reporting during the first stages of the housing bust with pronouncements from the NAHB, or the NAR spokesman David Lereah, who became widely ridiculed and discredited for his break with reality. From this episode, we learned a valuable lesson in "consider the source." You will find some of the reported data comes direct from the credit card companies, as in Chase reports... or Capital One reports... At best what we get from that data is a subset of the total. And then we get quotes from pay-per-use data mining outfits. Again I suspect each one has insight only into its own bailiwick, and is driven by its own agenda.So I have come around to sales tax collections as the most comprehensive view of the level of sales in a state. Cash sales. Credit sales. Goods. Services. Relatively transparent reporting. Just how is my state doing? One thing you won't get: states going back month after month and revising their previously released sales tax receipts. I like that. And yet the states succumb to spin as well. They do this by leading revenue reports with comparisons against "estimate." As I have said in a different post, anything that compares to estimate, ignore it. If you open the Monthly Financial Report Dec 10 PDF at the Ohio link, you will see that Director of OBM Sabety says in her letter to Gov. Strickland: "Ohio's November tax receipts were again close to expectations coming in $25.1 million (2.2%) above estimate. For the fiscal year-to-date, tax receipts are $46.2 million (0.7%) over estimate." Sounds good, but meaningless.2. what does the SUT data include?If you look at the revenue statements, you will see that cigarette, alcohol and gaming revenues are usually accounted for as separate line items, as is lotto. I do not try to add those into SUT. On the one hand, it would be interesting to know that alcohol sales are up/down and why shouldn't they be included in the larger picture? OTOH, it would be more work, and would perhaps make the picture less clear by trying to do it. My sense is that many states are raising the little taxes e.g. cigarette tax, because that is politically more easy and the low hanging fruit. Putting through a full percentage point statewide sales tax increase gives you some idea just what dire straits a given legislature is in.In a different thread I commented on PA revenues and a magic infusion of $1.9B in October Misc-other funds. No, I do not think that came from the new gaming locations as someone suggested. It came from the federal government, borrowed from you and me. I criticized OH above, but saw that Ohio accounts for fed funds very transparently - good on them - by incorporating an ARRA Revenues and Disbursements section to their monthly report. Follow the same the OH link. The ARRA section begins: "Ohio began receiving funds in March 2009 and has since received $2.188 billion in federal revenue and disbursed $2.137 billion as of November 30, 2009."Other states are not so transparent, which is why you might see state revenues bounce up, though you will not know that the money was borrowed from the US taxpayer. Another reason why it is important to look at SUT as an indicator. If we want to stop giving the states money, they are going to have to become self sustaining through their own collections. Is it even widely known that the fed govt is propping up the states?I was aware of the Philadelphia tax increase but I do not believe it affects state SUT. PA has raised a lot of taxes here and there, but to my knowledge the SUT is the same as last year. I was surprised to see how relatively low New York SUT revenue is, but that is because only 4% goes to the state, whereas the local piece can be 4% or higher. In fact as I have delved into the mechanics of tax collection I am finding a number of locations - NY, CA and others where the combined tax rate is going over the 10% mark.3. Internet salesYes I think it has some effect. I looked at it, and I determined that it has less effect than would explain the SUT data we are witnessing. Did internet sales take away 14% of the retail sales in Texas? No. I came across a study done on just this topic in IL: http://tax.illinois.gov/AboutIdor/TaxResearch/InternetSalesT...These guys have put in a lot more detailed thought on the issue than I will ever hope to do. I did learn a number of things that influenced my opinion on the impact of online sales. For example, 22.7% of online sales are in the category of tax exempt food, drugs and medical appliances. I had not considered that. 18.8% of online sales is category Motor Vehicle parts and dealers. IL judged that these automobile revenues were not "lost" due to the necessity of the vehicle registration process.It's a good report and perhaps a topic for its own thread. So while internet sales are important, my view now is that it is a long trend with less impact than the top line internet sales number would suggest. I also believe that states will react to this over time.Gotta head out to do some christmas shopping... Really.
You wouldn't know there is a recession from shopping in our area (Pinehuurst, NC, and neaby by communities. Places like Walmart, Best Buy, etc., are PACKED with long lines at checkout. Some of the upscale boutiques seem to have few cutomers, but the chains stores are doing very well. So we are doing a lot of shoping on line. Incidentally, you do pay tax on your purchases because they have stores all over.brucedoe
Excellent Job.I was well aware retail sales were a mirage.One of the keys is this line in the advance sales reportshttp://www.census.gov/retail/marts/www/marts_current.pdfAdvance estimates are based on early reports obtained from a small sample of firms selected from the larger Monthly Retail Trade Survey (MRTS) sample.Think about that for a second.Now think about stores guaranteed to not sampled.For example think about stores like Circuit City going bankrupt and closing 567 stores. Think some more about store bankruptcies.The 31 retailers to file for bankruptcy in 2009 include:Penn Traffic:11/18Hackett's Department Store: 11/10InkStop: 10/1Sacino & Sons: 9/11Samsonite: 9/2Escada: 8/13Finlay: 8/5Bashas: 7/12Crabtree & Evelyn: 7/1.Best & Co: 6/26Eddie Bauer: 6/17Arcandor: 6/9Oilily: 5/28Anchor Blue: 5/28Door Store: 5/27Filene's Basement: 5/4Bi-Lo: 4/19Z Gallerie: 4/10Ultra Jewelry: 4/9Big 10 Tires: 4/2Zounds Hearing Aid Centers:3/30Al Baskin Co: 3/23Drug Fair: 3/18Strasburg-Jarvis: 3/11Joe's Sports & Outdoor Stores: 3/4Everything but Water: 2/25Ritz Camera; 2/22S&K Famous Brand: 2/9Fortunoff: 2/5Bruno's Supermarkets: 2/5Gottschalks: 1/14The above list thanks to:http://www.risnews.com/ME2/dirmod.asp?sid=E2F9E0FBAE98430896...Some of those stores may still be in business, but even those that are closed many doors. Hmmm.What did that do to same store sales if all the hopeless stores closed?And for places like Circuit City, where do you think the customers went?Dis Circuit City shoppers instead go to Best Buy? ... Driving up sales at Best Buy? You bet!Here's a few more hints:Ann Taylor: The women's apparel chain has increased the number of stores it will close this year to 163 from 117 as part of its cost-cutting program to save $125 million over the three years ending in January 2011.Finlay: The jeweler filed for Chapter 11 protection on August 6, 2009. It currently sells jewelry at about 77 department store locations and operates about 106 stand-alone jewelry stores as Bailey Banks & Biddle, Carlyle & Co Jewelers and L. Congress. The company listed assets and debt in the range of $500 million to $1 billion in its Chapter 11 filing.Zale: Jeweler closed 118 underperforming stores in its fourth quarter, which ended July 31. Year to date for 2009, Zale has shut down 191 locations. Of the closings, 31 were kiosks and 160 were retail stores.Kmart: Big box retailer plans to close three Detroit stores in Fall 2009 with liquidation sales beginning on August 30, 2009. According to Kmart spokeswoman Kimberly Freely, these locations will close due to "a number of factors," including poor sales performance or failure to negotiate favorable lease terms.See http://www.risnews.com/ME2/dirmod.asp?sid=&nm=&type=...There is your answer.I commend you for quantifying what I knew to be happening.ThanksMish
"I was well aware retail sales were a mirage."I tend to agree. But look at this interesting anecdote. We are in the middle of a screaming, snowing Nor'easter here in NJ. And the report from one town smack in the middle of it all:""The roads are a mess and slippery,'' said Lt. Robert Mazza of the Brick Township Police Department. ""We had a couple of minor accidents, fender benders mostly. People are doing their Christmas shopping. The plazas are full.''"Go figurehttp://www.app.com/article/20091219/NEWS/91219042/Snow+conti...
I dont know.....so many stores in my area are closing.....some stores are seeing improving sales.....wonder why?Dave
But facts are facts, and if we go back to the actual reports from the states, if we look at what the sales tax receipts are, how can we have sales up by 2.4%, or by any percent, when sales tax receipts are down by, in some cases, double digit amounts.My guess is that the news articles are quoting month-on-month or quarter-on-quarter growth while you're looking at YoY? My basic assumption is that sales dropped and bounced about a year ago, but the bounce was only to a level (say) 10% below where they were before. Numbers during this year have been flat or rising slightly overall, but that still means they're below last year's levels.It seems to me that we're heading towards a steady rising trend, but at a lower (i.e. more healthy) level than before. This is what we want, right?SAPS. Just looked at that Bloomberg article which says it in black and white in the first paragraph:U.S. retail sales may have risen for the third straight month in November as purchases during the Black Friday weekend propped up holiday sales, a research firm said.November sales may have advanced 2.4 percent, according to analysts’ estimates compiled by Retail Metrics Inc. That compares with a slump of 7.3 percent last year ... (my bold)So sales dropped 7.3% from Oct to Nov last year, and this year they rose 2.4% from Oct to Nov. (No mention of level vs. last year, I assume lower, so no contradiction with your data.)
Retail Sales Rise: Where? Let's Take a Look; Expect Nothing Less Than Panichttp://globaleconomicanalysis.blogspot.com/2010/02/retail-sa...In response to For 15 Million Unemployed any Job is a Good Job; Questions for Pollyannas; Wishes Aren't Fishes reader "Sunny Jim" asks ...Mish
I know it doesn't mean anything, but I've been out the past couple days. At my local mall, there were so many cars in the parking lots I didn't bother stopping. I would have had to park farther out than I do at the height of the Christmas season. I drove up and down the aisles looking for something, anything close in, and finally gave up.I went down the road to a smaller mall where my wild bird store is located, and still had to park 4 aisles away.I don't know what they're all doing there, and maybe they're not spending, but home, they weren't.
Texas Sales Tax CollectionsJanuary 2010 State Sales Tax Collections To General RevenueState sales tax net collections* deposited to general revenue totaled $1,655.3 million in January 2010. Compared with the $1,928.3 million collected in January 2009, this represents a decrease of 14.2 percent.Year over year sales taxes in Texas are distorted by spending for repairs and recovery after IKE. Ike severely damaged the most expensive and heavily portion of Texas. There was damage, although not as sever throughout East Texas. Due to most of the damage on the coast being from rising water, and the slow speed at which flood claims were processed, much of the damage was in the first stage of repair in the January of 2009.Not sayin' ya ain't right, just that data point is wiggy.CheersQazulight
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