Commission on Government Forecasting and Accountability
Donald Moffitt, Co-Chair
Donne Trotter, Co-Chair
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October 2015 Monthly Briefing
Edward H. Boss Jr., Chief Economist

Concerns are being raised as to how strong retail sales will be during the holiday season. Data released towards month end indicate a sharp moderation in economic growth from the second quarter. Some of the strongest areas of the economy have slowed. New home sales fell 11.5% in September, reaching the lowest level since November 2014. While existing home sales remain strong, speculation is rising that the market may be topping out.

In another area of strength, auto sales supported by a continued aging of existing cars, and the lengthening of the average auto loan sparked improved sales. However, slowdown in China’s economy while many countries abroad are taking steps to stimulate stagnate economies have cut into U.S. auto sales. While there is an apparent weakening in what have been strong sectors of the economy, there also is clear evidence where sectors already have deteriorated. Durable goods orders fell in four of the past six months. Indeed, the entire manufacturing sector has been deteriorating over the past year and some analysts are calling it in recession.

Even so, Consumer spending has slowed only modestly while disposable income and personal savings improved somewhat. As the holidays approach, expectations by the National Retail Association (NRF) are that retail sales in November and December will increase by 3.7%. This would be down from last year’s 4.1% advance, in line with the average of the past 5 years, but below those seen a decade earlier.

While such a sales increase may seem optimistic given the decline in department store sales during the first 9 months of the year, it fails to notice the change in buying habits. The NRF projects that almost half of all sales will be on line and one in 5 may use their smart phones. Amazon already said it would hire 100,000 workers, FedEx is hiring 55,000 seasonal workers, while UPS will hire as many as 95,000. Soon other holiday forecast will be released and comparisons will be made. At this time, however, despite a slowdown in the pace of the economy, it appears that holiday sales in 2015 may be good, if not exceptional.

Jim Muschinske, Revenue Manager

Overall base revenues fell $319 million in October. Comparatively lower income tax rates, related income tax diversions to the education and human service related funds account for the decline.
Through the first third of the fiscal year, base receipts are down $1.306 billion. The drop reflects comparatively lower income tax rates as well as the one-time nature of some pharmaceutical court settlements recovered by the Attorney General‘s Office last fiscal year.