November 2013 Monthly Briefing
ECONOMY: HAPPY HOLIDAYS?
Edward H. Boss Jr., Chief Economist
Retailers face many challenges this Holiday season. Thanksgiving falls as late as possible this year with six fewer shopping days. This makes it the shortest holiday buying period in more than a decade. Partly in response, many major stores are opening their doors on Thanksgiving Day itself.
At the same time, a myriad of events add to uncertainty. Concerns over congressional action over increasing the debt ceiling, a cutback in spending due to the next implementation of sequester, not to mention concerns over health care have eroded consumer confidence. Consumer confidence as measured by the Conference Board in November was at the lowest level since April while Consumer Sentiment by the University of Michigan fell to its lowest point since the end of last year. A recent Gallup poll points to a decline in planned holiday gift spending.
The National Federation of Retailers forecasts a gain of 3.9%, marginally higher than the 3.5% last year, but in line with a ten-year average of 3.3%. Other forecasts vary, but most project sales slightly above or below last year’s pace.
Higher home prices and record stock market levels while employment remains weak suggest that stores selling high-end goods may do relatively better than the discounters. Online and mobile are likely to be a leading area of growth for retailers as consumers go to the web to do their research and get the best prices. Moreover, expectations for inclement weather in many parts of the country could increase internet sales. Thus, while there may be many “deals” for the shopping consumer, retail store operators are likely to see their profits under pressure at a time when many hope to turn their profits into the black.
REVENUE: NOVEMBER RECEIPTS EXPERIENCE SLIGHT DROP AS REVENUE PERFORMANCE MIXED
Jim Muschinske, Revenue Manager
Overall base revenues dipped $39 million in November. The performance of the larger economic sources were mixed as both personal and corporate income taxes declined slightly, while sale tax receipts managed to post modest gains. The remaining revenue sources for the most part were also mixed.
Through the first five months of FY 2014, base general funds are up $584 million as compared to last fiscal year. Much of that growth can be attributed to the one-time surge in transfers related to the refund fund [$397 million]. However, despite the pause in October and November, the larger economically-related sources have fared decently. Sales tax continues to do quite well, up $164 million to date. Gross personal income tax is up $148 million, or $149 million net of refunds. Gross corporate income taxes are up $73 million, or $69 million net of refunds. Other sources are up $65 million for the year, although all of that increase can be attributed to September’s receipt of one-time court settlement proceeds.