The local economy appeared to take a U-turn with a sales tax report released Monday that indicated an almost 5-percent drop in receipts from the same month last year.
April’s decrease follows five straight months of positive numbers relative to the previous year’s collections. However, four of those months showed relatively flat receipt reports compared with the previous year’s collections — less than a percentage point increase for each month.
With April’s decline, sales tax receipts are up just .66 percent year-to-date relative to the same period last year.
Regarding the local economy, sales tax receipts are the leading indicator for the health of the local economy.
According to Monday’s report, sales tax receipts were down 4.98 percent from the same month last year. Interestingly enough, the Town Tourism Committee (TTC) reported that this past April was the strongest on record — up 3.03 percent in lodgers tax collections from the previous year and more than any year past. In fact, the TTC reported that April 2011 was the first time when lodgers tax receipts passed the $100,000 mark during the first third of the year.
Unfortunately, visitors to the area seem to have showed little inclination to spend their dollars locally.
April’s numbers were 9.9 percent lower than the past five-year average for the month and the second lowest April sales tax collection in the past five years since 2009 ($367,273 vs. $369,793 this year).
April’s numbers for Archuleta County reflect a national economy that appears to have stalled.
Most analysts believe that sluggish growth nationwide reflected consumer reticence for spending money in an uncertain economic climate. Furthermore, high gas prices have left consumers reticent about discretionary spending.
In fact, the federal government reported the national economy grew at an anemic 1.8 percent rate during the first quarter of this year.
While some analysts believe the economy will regain momentum in the second half of this year (especially if gasoline prices continue to fall the way they have over the past month), that forecast indicates only modest growth.
Earlier this week, the Associated Press reported that a survey of economists indicated a bleak forecast for the national economy during the coming months. The survey began in mid-May and ended on June 3 — the same day the Labor Department reported that unemployment had crept back up to 9.1 percent in April.
It is not clear if the national unemployment situation will improve. On Tuesday, the National Federation of Independent Business released a report that showed a majority of small businesses were not looking to hire more workers in the coming months and many small business owners said they might actually downsize their workforces in the coming months.
However, on Monday, the Business Roundtable (which represents CEOs for the 200 biggest U.S. companies) reported that 51 percent of chief executives plan to increase their workforces during the second half of this year.
Last quarter, 52 percent of CEOs stated that they would be ramping up hiring this year.
The disparity, it appears is due to the fact that, while large companies have been enjoying record profits over the past year and are looking to expand, small businesses are experiencing an unfortunate squeeze from a poorly performing economy.
On Tuesday, the AP also reported that Macroeconomic Advisers (an independent group of economics analysts) have repeatedly scaled back growth projections for the national economy. Initially forecasting a 3.7 percent growth rate for the second quarter of this year, Macroeconomic Advisers lowered that projection to 3.5 percent soon after the first forecast, then down to 3.2 percent and again to 2.8 percent. As of Tuesday, Macroeconomic Advisers again lowered that forecast to 2.1 percent, barely an improvement over the dismal 1.8 percent growth reported for the first quarter of this year.
Unfortunately, that analysis could be applied to the local economy. While tourism showed strong numbers in April, those visitors apparently did little to boost local sales.
“I just wonder how much lower our sales tax collections would have been if tourism had not seen an increase in April,” said TTC president Bob Hart.
Hart raised an interesting point and inadvertently raised another one: if Archuleta County has most of its eggs in one economic basket (tourism), what will it take to distribute those eggs and presumably give the area a shot at stronger economic growth?