Category Archives: Indicators
Almost all of the indicators are improving, except for unemployment claims, which stopped falling in June. Some surprises were:
1) Consumer sentiment jumped up into the 80s, good news for car and truck dealers.
2) The average wage for the first half of 2012 shifted up from 2% to 3.5%, indicating some improvements in the labor sector for employees (consumers).
3) Residential construction values are up almost 14% this year, this adds about 1.4% to sales tax all by itself.
4) Sales tax receipts for the first quarter of fiscal year 2013 are up 7.2%, slightly below our forecast last December of 7.8% for FY2013.
Now, if we can just not go too far over the cliff.
DOUG MACDONALD – October 1% local sales tax distributions beat expectations by increasing 12.7% over the same period last year. The total local sales tax distributions of $40.56 million by the Tax Commission in October, representing sales for August in Utah were almost $5 million higher than the $36 million distributed last year at the same time
Double-digit sales were common in Salt Lake County cities. Salt Lake’s distribution of $4.18 million was up 13.5% and West Valley’s distribution was up 12.6%. Murray’s distribution was up 16.5%, suggesting auto and light truck sales did well in August. Higher auto sales were evident in September across the nation (see charts from the New York Times), suggesting next months distribution will also do well. September 2012 auto sales grew almost 15% in the U.S., the highest in four years.
Tourist-heavy cities ilk St. George (+15.6%) and Park City (+19.7%) also fared well in August.
For the first two months of the cities’ fiscal year 2013, local tax distributions were up 8.7%, slightly ahead of our December forecast of 7.9%.
Economic Policy Analyst
September’s distribution the 1% local sales tax came out earlier this week, and July turned out a slower growth month than the prior two months. Statewide the 1% took in $32.7 million for July sales, putting September distributions, up 4.2%.
Reports out today indicated that August sales nationwide rose 0.5% above July, pretty good, but much of the increase was due to increases of gasoline prices.
Also, nationally, both consumer confidence indices rose significantly suggesting increased spending over the next two months. See chart below from Moody’s Economy.com.
This was the first fiscal month of fiscal year 2013. For fiscal year 2012 growth was a respectable 8.0%. (We predicted 7.9% last December and 6.8% way back in December 2010).
Slower growth for one month does not necessarily mark a trend since we have tended to have one month in three be near zero over the past year. So if our slowest month is 4% that would be good. This is most likely due to Tax Commission cut offs and processing.
Economic Policy Analyst
May sales and July’s distribution of the 1% local sales tax proved to be quite strong, rising 10.9% statewide to $35.8 million. For 11 months of fiscal year 2012 distributions are up 8.0% with one month to go. We do not expect these growth rates to continue at this pace given the flood of negative recent national economic news. Although we have to admit that Utah’s employment prospects thus far have shifted into third gear recently to more than 3% growth.
A host of cities saw their distributions rise more than 15% in July. The largest city in the state, Salt Lake City, received a 17.5% increase at $3.7 million. Its fiscal year to date gain is standing at 9.6%. Notable increases were seen in Sandy (26%), Lehi (18%) and Provo (16%).
The Tax Commission instituted new 2011 population numbers to calculate the 50/50 formula in July’s distribution. Statewide the 2011 population rose to 2,817,222 from 2,763,885 in 2010, for an increase of 53,337 people (1.9%). We will attempt to calculate the future % impact on each city due to the new population numbers as soon as possible.
Economic Policy Analyst
June’s distribution came out last week and was up 1.5% compared to last year. Even though this appears to be slower growth, it looks like it fits a pattern of slow growth in the first month of a quarter, followed by average growth in the second, and double-digit growth in the third month of the quarter.
For the first 10 months of the fiscal year the statewide 1% is up 7.7%, a bit higher than our December 2011 forecast of 6.4% and much higher than our pessimistic estimate of 2.4% (which assumed a European disorganized default, double-dipping the U.S. into recession).
Several of the major cities we track had significant decreases and one had a huge gain in June. Park City and Murray were down almost 50%, while South Jordan jumped 102%. We think these changes had something to do the truing-up adjustments in the hold-harmless formula, but have not confirmed that.
In sum, a great year for most cities !!!
If you have further questions, please feel free to give me a call,
Economic Policy Analyst
The economic picture for Utah still looks like continued growth ahead, but it appears that that growth rate is moderating a bit.
1) Employment growth rate slowed down after September, then improved a bit in March.
2) After a 5% year over year jump in the third quarter, Utah average wages fell 2.5% in the 4th quarter.
3) Unemployment claims seemed to have stopped declining.
4) Business equipment and software spending drifting downward.
5) U.S. leading indicators are slowing down too.
On the plus side:
1) Utah nonresidential construction values permitted were up almost 59% from December through February.
2) Utah construction employment is up 5%.
3) Statewide sales tax growth for the last 3 months is up almost 6% (we’re only 10% below peak growth in May 2007).
We may be in for a pause before growth picks back up in the summer.
New car and truck sales rose almost 16% in February 2012 compared to the same month a year ago.[i] Auto sales were up almost 24% as consumers snapped up fuel-efficient models due to higher gasoline prices. Truck sales, up nearly 8%, were pulled up by Ford’s F-series trucks, which shot up 26%. Ford F-series were also the most popular make by volume, selling 47,273. Next highest were Toyota’s Camry, which sold 34,542. Other most popular makes with high growth rates in February were:
1) Ford Focus, up 115%,
2) Nissan Altima, up 58%,
3) Toyota Prius, up 52%,
4) Honda Civic, up 42%,
5) Toyota Camry, up 27%.
Among automakers, Chrysler sold 40% more autos in February 2012 than in 2011 at 133,521. The largest seller, General Motors, sold 209,306 autos, but up only 1% from last year. Foreign makes like Kia, Volkswagen and BMW registered more than 30% gains.
Analysts were generally optimistic about 2012’s continued strong auto sales. “We don’t see any major risks to industry sales going below 14 million this year (up 12%),” said Jesse Toprak from TrueCar.com, which tracks sales and pricing.[ii] U.S. car and truck sales troughed at 10.4 million sales in 2009 and then rose to 12.5 million sales by last year.[iii] Automakers are also happy to get higher profits by giving away fewer incentives and all this despite higher gasoline prices.
[i] “Auto Sales Pick Up Pace Despite Gas Prices”, Nick Bunkley, New York Times, March 2, 2012.
Even though the array of stop light colors are the same, there were marked improvements in several economic indicators for Utah in February. First, based on revised numbers, Utah wages, particularly the average wage paid for each job improved about 0.8%, such that wages are now running in excess of 6% instead of 5%. This alone bumps up sales taxes by almost 1%. Second, construction jobs are now increasing at a 2.5% clip, better than the slight declines observed last month.
Third, the U.S. consumer sentiment index improved 5 points to 75, now back to where it was before the August plunge (due to the U.S. debt ceiling crisis). This means consumers are feeling better about jobs and their financial prospects. Finally, the three month average growth in sales taxes improved from 7.7% over the prior year to 11.4% growth. We don’t expect continued double-digit growth here, but our models indicate that 8% growth in 2012 is possible.