Thursday, March 20, 2008

Sales Tax Revenue falls faster in California and Florida



Year over Year Sales and Use Tax Revenue fell in California by 5.54% last month. Florida’s Sales Tax Revenue fell by 7.23% and is declining faster than it did during 2001 Recession. With consumer spending down that much, both states are clearly in recessions. New York grew by 0.29% over the low point reached last February. Texas continued its strong performance, growing by 6.64%.

As discussed in this previous post, these states are the 4 largest states in terms of contribution to GDP. In 2006, California contributed 13.2%; Texas, 8.1%; New York, 7.8%; and Florida, 5.4%. Together they accounted for 34.6% of GDP. Averaged together weighted by GDP contribution, the composite for the 4 states fell by 1.62%. Florida and California are two of the hardest hit states in terms of housing depreciation. If housing prices continue to slide, consumer spending will problably continue to be weak.

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