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Galveston Economic Report
David Stanowski
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Texas Economic Indicators
by David Stanowski





Monthly Sales Tax:
 Latest Update: 02 August 2018


Sales tax collections are a very good proxy for overall economic activity, excluding investment. They are also very accurate, because they do not rely on estimates or formulas; they represent actual sales.

The following graph has been generated by calculating a backward looking 12-month rolling sum, of the previous 12 month's sales tax collections, to smooth the data. 

Sales tax collections topped out in February 2009, as the damage from Hurricane Ike and the 2007-2009 Great Recession slowed the Texas economy. Sales tax collections bottomed in March 2010 and remained strong until they met some headwinds in September 2015 which pushed collections down for 14 months where they began climbing, once again. Currently, the backward looking 12-month rolling sum has exceeded $30 billion every month in 2018! 

Galveston Sales Tax Monthly

To get a more "dynamic" and "internal" look at the uptrend in Texas sales tax collections, the Year-Over-Year Rate of Change was calculated to discover how the current 12-month trailing sum of sales tax collections compared to the sum 12 months ago throughout the period in question.

The positive rate-of-change in Texas sales tax collections peaked in October 2006. The first two years after that show the effect of the world-wide economic slowdown that preceded the financial crisis. After that, Hurricane Ike and the effects of the Great Recession drove the rate-of-change down to -10.57% in March 2010.

The FED's unprecedented credit creation, in response to the 2007-2009 crisis, allowed the State economy to stage a dramatic recovery, but the rate of recovery peaked in August 2012 at a slightly lower level of momentum than registered at the October 2006 peak. 

After the August 2012 peak, the growth rate contracted for the next 4 1/2 years, but it has rebounded since the September 2016 low and is currently accelerating
upward!

Texas Sales Tax YoY RoC

These graphs show the "nominal" amount of sales tax collected which corresponds to the nominal amount of State economic activity. In other words, this data has not been "adjusted" for inflation by using some "estimate" of the current inflation rate to create the "real" (inflation-adjusted) rate-of-change of sales tax collections. Since the June 2018 NOMINAL rate-of-change in sales tax collections was 9.16%, adjusting for the current "estimated" rate of inflation of 2.8% indicates that the State economy is still expanding at a healthy rate on a "real" basis!

Note: with a sales tax rate of 6.25%, the most recent 12-month sum of sales tax collected of $31,667,448,000 was generated from economic activity of $506,679,168,000.




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