One last pair of charts, showing the impact of recessions on tax data, via the Rockefeller Institute of Government. These two shows the impact of recessions on general tax receipts, and on retail sales.

In both charts, the current contraction is the worst on record for the time periods (1973, 1964 forward)

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Retail Sales: 5 Recessions

5 Retail Recessions


State Tax Revenues (1964- 2009)

State Tax Revs & Economic Changes

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Source:
State Tax Revenues Show Record Drop, For Second Consecutive Quarter
Lucy Dadayan and Donald J. Boyd
The Nelson A. Rockefeller Institute of Government

http://www.rockinst.org/pdf/government_finance/state_revenue_report/2009-10-15-SRR_77.pdf

Category: Economy, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

29 Responses to “Economic Declines and State Tax Revenues (1964- 2009)”

  1. Bokolis says:

    Am I to accept that the scale of last two drops reflect state and local governments’ increasing reliance on use taxes? Charging an 8.875% vig, $10 for a pack of smokes and $13.50 to get from Fort Lee to Queens is far easier than slapping a tax on someone living in Fort Lee and working in Manhattan that hauls in $125k and up (plus stock, etc).

    A bunch of that last one must be p-tax defaults, no?

  2. bsneath says:

    It is interesting that the 1980 recession had essentially the same percentage decline in retail sales. I suspect there was greater pent up demand though to pull out of the recession more quickly. Less debt overhang and the boomers were in their 30s – high consumption years.

  3. Transor Z says:

    Check it out — the drop in tax revenues in the 1974 and 1980 recessions tracked decrease in GDP. Look at how much the drops in state tax revenue during this and the last recession have outstripped drop in GDP.

    What’s up with that?

  4. DeDude says:

    In the 1980 recession they killed credit by increasing interest rates, in this it was killed by banks zombing themselves. Result is the same consumers cannot consume without increase in income or credit – and income does not go up until unemployment goes down.

  5. DeDude says:

    Transor; I think that has a lot to do with the fact that the investor class has harvested an increasing % of the GDP – and as we all know the investor class don’t pay taxes, they pay politicians.

  6. willid3 says:

    transor i think its the changes to GDP that have happened since then. all that manipulation of it has made it so it really isn’t tracking what it says it does

  7. wally says:

    This is a nice, timely post. I notice several posts on various news sites and blogs lately that try to minimize the job losses and personal income stats as unimportant.
    Tax revenues are a bottom-line statistic that cut through all the BS about seasonality, adjustments and other factors. Lots of other stats have been made very unreliable in recent years or have been fiddled, jiggered and otherwise made useless. But the bottom line is the bottom line.

  8. call me ahab says:

    it’s interesting that the 2001 recession never went negative on retail sales- much to do w/ rising home prices and home equity lines i would imagine-

    does anyone remember the huge push on CNBC after the dot com crash that NOW was the time to put $$$ in RE-

    and the sheeple were only too happy to comply w/ that failed strategy

  9. KevinM says:

    ahab,

    “NOW was the time to put $$$ in RE”

    Yes, it was the right time. You just had to get out 6 years later.

  10. call me ahab says:

    i guess my point Kevin was the sleazy transition- as CNBC was touting the dot com nonsense all the way to the top- and then after the implosion- switching gears and saying- NOW you should invest in RE- you know- pitch men- working each bubble to the top- w/ blatant disregard for any warning signs-

    housing- the most illiquid asset a normal person can own- touted as next big investment bonanza-

    that you indicate- yeah buy in 2001 and then sell 2007- IS the whole problem

  11. Simon says:

    @Transor Z

    It’s very likely to be government fiscal stimulus that is holding up GDP this time.

  12. Mannwich says:

    @ahab: Not any different than people and the media telling you to “buy stocks now”, no? Same thing in my mind. It’s all a corrupt cesspool, the nudges and winks abounding.

  13. Lugnut says:

    Re: state tax revenue graph

    Now you know why most of the stimulus money never trickled down past the state coffers. The states needed it to prop up their payrolls and pensions. Musn’t have layoffs, thats bad juju for politicians, and reserved for the private sector

  14. HarryWanger says:

    Wow, I go away for a long weekend of travel and look at the market! Doesn’t seem to be a lot of head wind so the path of least resistance with the Fed on your side looks up. Actually, it will if SPX can close above 1100 at some point. If we get that, she may run into the EOY. Sold my positions when I went on the road (only because I was traveling). Sometimes you get lucky and that certainly qualifies for that category. I was long DXD and QID and walked away with a profit only by chance that my trip coincided with the run up. Keeping an eye on 1100 before any positions are initiated.

    BTW: Once again, I’m getting my order calls from my retailers again yesterday and today. And, once again, I’m hearing the same complaint about how awful business is. I don’t know where all this “good” retail news seems to be coming from but it’s not from the people I’m dealing with.

  15. call me ahab says:

    manny-

    but buying stocks now is no different than buying tech stock in the late 90′s- all w/ the antipation that you will make big $$$ on rising share prices because it is a “no brainer”- PE’s?? who cares about those- fundamentals?? irrelevant- the Fed has your back- the $ is going to ZERO- and you “can’t lose”-

    talk about a crowded trade-

    but what kills me is CNBC just rolls along like nothing happened-

    WHAT? there was a bubble that burst and people lost their ass- wow! well here some stocks you should buy . . .

  16. ashpelham2 says:

    That 2001 recession was the first ever economic downturn that people in my age group worked through as taxpaying members of society. Gen X/Y folks have just lived through the dot com bubble and thought the market just grows all the time, at 10% nonetheless. Now, 10 years later, we’ve had flat returns in the S&P during that time frame, and the highest unemployment since our parents were in their 30′s. My parents in their late 50′s now, one retired, the other working for hobby.

    We had to have the real estate bubble to keep the good times going. How dare anyone suggest that we – gasp! – slow down our consumption and take it down a notch for a year, 18 months.

    Now, in the greatest recession since our Great GRANDPARENTS were this age (30′s in the 30′s), it’s a bit of a shock. I’m impressed by how much American’s have decided to cut back at the stores, but spending Saturday at the Bama-LSU game, didn’t look like a recession was going on to me. I guess for SEC Football, the party never stops!!

  17. HCF says:

    For our debt addicted economy, there are two choices: detox or take an even bigger hit of the drug you’re addicted to. For the past 30 years, we just keep on upping the dose higher and higher… I fear that rather than allow a painful, but necessary withdrawal, we’ll just O.D. instead merely because it’s what is most politically expedient and popular…

    HCF

  18. batmando says:

    not stop orders but liquidate to go on the road, hmm, how conveniently timely

  19. HarryWanger says:

    batmando: As I said, sometimes you get lucky. I wasn’t going to hold double short (or long) index etfs when I was traveling. Regarding stop orders, I talked about how I got annihilated in an AAPL trade using a stop order. Got blown through before the market even opened on two downgrades. Don’t use them anymore. I’m either there to stop myself out, or I get out if I’m away.

  20. willid3 says:

    ashpelham2, nothing really new about sports there. even in the depth of the GD, that ‘party’ never stopped. it may have had some cut backs (probably like now). but it didn’t stop

  21. willid3 says:

    hcf, debt has driven the economy for almost 100 years now. our problem was that incomes weren’t increasing and wall street figured out how to make money on bad loans, replacing the incomes that didn’t increase. had they not figured out that and gamed it so that incomes would keep collapsing, the 2001 recession would never have been over, in a way i don’t think it ever was. we just had a credit band-aid on it. but without you have a very small economy, and we have lots of people, and they all need jobs.

  22. Bruce in Tn says:

    http://www.foreclosuredataonline.com/blog/foreclosure/more-california-hotels-fall-foreclosure/

    More California Hotels Fall into Foreclosure

    “The amount of hotels in California that have been involved in actions of foreclosure or default has risen incredibly by 125% within just the past sixty days.

    So far, 31 hotels have already been foreclosed and 175 properties of hotels are currently in default. Properties that have already been lost to foreclosure can mostly been found in the counties of Riverside, San Diego and San Bernardino.”

    …I noticed Jane Wells on CNBC stating today that this was an absolutely marvelous time to see the USA…I wonder if anyone suggested to her to use that storyline today..

    ..Yes, I am skeptical…of much of what I see lately…..

  23. Lugnut says:

    At least our new Governor (Christie) in NJ doesn’t appear have any preconceptions about the state of our budget/tax situation

    “N.J. Gov.-elect Chris Christie considers declaring financial state of emergency
    By Star-Ledger Staff
    November 09, 2009, 7:34PM
    As he seeks concessions from state workers to balance his first budget, Gov.-elect Chris Christie is examining the possibility of declaring a financial emergency in the state, according to an official familiar with his plans.

    Such a declaration — invoking the same law as if New Jersey were hit by a natural disaster — could give Christie broad powers, such as suspending rules governing state worker layoffs. With many state workers due to receive two raises in the next fiscal year and a no-layoff pledge in place through December 2010, Christie’s transition team expects to tackle the issue before he takes office Jan. 19, two of his advisers said today.”

    All hands on deck. This ought to make a few (shorter tenured) state employees a little nervous.

  24. DeDude says:

    Willid3; I agree, the 2001 recession was never over. It’s just that our masters found a way to blow a boubble in the residential housing marked. Some of the fantasy gains in home values were then cashed out by the sheeple for consumption, and that held the GDP values up. That worked long enough that our masters could have their little lapdog elected for a second presidential term. Just enough time to rob the country one last time before it all fell apart. The beauty of it is that the mess left behing is so bad that the new guy will not be able to fix it fast enough to avoid blame (for not fixing it). So at the next election our masters can again get one of their little braindead lapdog elected and reapeat their rape of this country – ya bet ya.

  25. call me ahab says:

    “our masters found a way to blow a boubble in the residential housing marked. Some of the fantasy gains in home values were then cashed out by the sheeple for consumption, and that held the GDP values up.”

    exactly what happened

  26. Pat G. says:

    That’s what they refer to as “trickle down economics”.

  27. Winston Munn says:

    Remain calm. All is well!

  28. [...] (a)  “State Tax Revenues Show Record Drop, For Second Consecutive Quarter“, Nelson A. Rockefeller Institute of Government, October 2009 — “Fiscal 2009 Also Brought Record Overall Decline of 8.2% , or $63 Billion.”  See the key graphs here. [...]