Archuleta County and the Town of Pagosa Springs received excellent news yesterday when the Colorado Department of Revenue reported that sales tax revenues for the area saw a dramatic 24.38 percent increase in May receipts over the same month last year.
May’s increase was the largest jump in sales tax receipts since November 2005 (a 24.82 percent increase) and the third highest increase since January 2004.
With May’s numbers, sales tax revenues in 2011 are up 5.65 percent for the year compared to the same period in 2010.
County Finance Director Diane Sorenson cautioned that May’s unusually high increase in sales tax revenues could be due to timing issues with collections by the state.
However, Pagosa Springs Town Manager David Mitchem was sanguine regarding the report. “It’s certainly a positive sign,” he said, “I think we ought to be thoughtful how we analyze these numbers.”
Mitchem indicated that he felt that the fires in Arizona and New Mexico had contributed to increased tourism (and revenue) to the area.
However, two facts contradict Mitchem’s contention: the Arizona fires did not start until almost the end of May (mid-June for the New Mexico wildfires) and the Town Tourism Committee reported two weeks ago that lodger’s tax receipts for May were flat relative to the same month last year — up just $1 from 2010.
In fact, Accommodation and Food Services numbers were down 5.3 percent from May 2010.
Market sectors that performed well compared to last year included Manufacturing (up 22 percent) and Retail (up 4.6 percent).
Accounting for about 55 percent of the local economy, an almost 5 percent jump in retail sales represents a large boost in local sales tax revenues
However, the best performing sector of the economy was “Real Estate and Rental and Leasing” — up nearly 92 percent from the same month last year.
In fact, a report released Tuesday by the Pagosa Springs Area Association of Realtors (see related article) showed that Real Estate sales jumped 29 percent in Archuleta County during the second quarter of 2011 relative to the same period last year.
May’s sales tax revenues for the town and county represent welcome change for the area (numbers were down 4.98 percent last month) and a significant break from the dismal numbers reported for the U.S. economy.
Nationally, the economy has not only stalled, but appears to be slowly sliding back into a recessionary pattern. On Friday, stocks plunged after the U.S. Labor Department reported that the country’s unemployment numbers climbed to 9.2 percent in June.
During the last month, a mere 18,000 jobs were created while the government dropped over 39,000 positions (over 14,000 federal).
Wall Street’s response indicated doubts that the U.S. economy will improve much during the last half of the year.
June reported the second straight month of feeble job growth with hiring tepid in most sectors. Furthermore, economic conditions have caused many workers to simply give up looking for work, artificially keeping the unemployment number lower than a more realistic reflection of the nation’s job situation. The Labor Department reported that a quarter-million people stopped their job searches in June.
9.2 percent unemployment represents the U3 number or the percentage of workers actively seeking jobs. The U6 number also includes discouraged workers and those working part time, but who would prefer full-time work: in June, the “underemployment” rate jumped from 15.8 percent to 16.2 percent.
As reported in the June 23 edition of The SUN, May unemployment for Archuleta County was 10 percent (compared to May’s 9.1 percent rate for the U.S.), down from 11.1 percent in April. No U6 number is reported at the county or state level.
Although 2011 began looking good for workers in the U.S., especially with corporate profits at a 22-year high and companies adding an average of 215,000 jobs per month from February through April, May and June showed a downturn in hiring across all industry sectors.
For those working, the past month was also not good: average hourly wages declined and so far, after-tax-incomes for this year (adjusted for inflation) actually fell 0.5 percent from 2010 levels. Furthermore, the average work week declined from 34.4 hours in May to just 34.3 hours in June.
Nationally, top-tier workers have not experienced the pain felt by millions of Americans. Two weeks ago, the New York Times reported that the median pay raise for chief executives in the U.S. rose by 23 percent last year — exceeding the 16 percent return awarded shareholders during the same time period, as well as the 7 percent median gain on share revenues.
There are numerous reasons why increased CEO compensation and impressive dividend yields have not translated into job or GDP growth — continued offshore investment (including jobs) by U.S. companies, a reluctance to expand domestic operations, anxiety regarding current economic conditions, etc. — but those explanations provide slight comfort to those Americans who have lost a home, have not worked in over a year or have seen a precipitous drop in wages.
Unfortunately, Wall Street (while providing substantial gains for brokers) has recognized an untenable economic situation over the short term — i.e., the remainder of this year — and for the long haul. In order for unemployment (and by inference, the economy) to improve, the economy would need to grow 5 percent for an entire year. Growth at just 3 percent is necessary to hold unemployment steady and keep up with population growth.
In the first quarter of 2011, the economy grew at a sluggish pace of just 1.9 percent.
Moreover, June’s 18,000 jobs creation number hardly matches the 125,000 jobs per month required just to keep up with population growth. At least twice that many jobs are needed to substantially bring down the unemployment rate.
May unemployment numbers for Archuleta County will be published in the July 28 edition of The SUN. Historical records (from 1976, the first year the Bureau of Labor Statistics began compiling reliable records) suggest that those numbers should be better than April’s jobs situation.
Unless May shows a significant drop in unemployment relative to the same month last year, 2011 could end up being the worst year for joblessness in the county in over 24 years.
However, if the area continues to see a jump in sales tax revenues like that exhibited in May (those numbers being the area’s leading indicator for economic health), local companies could soon start hiring to keep up with what is an apparent boost in demand for goods and services.