Wednesday, November 11, 2009

California State Revenue Data: October 2009

Another month, another year-over-year decline in state revenue. From the controller:

Things did get worse a little less quickly this month, mostly due to stimulus spending:

The rise in sales tax indicates that consumer activity has begun to stabilize. Several federal programs such as the "Cash for Clunkers" generated significant consumer spending on new cars in the third quarter. The first-time homebuyer tax credit coupled with low home prices has spurred existing home sales over the past two quarters, as well. This also has contributed to increased consumer spending on both durables and nondurables needed for home repairs and alterations. Indeed, the rise in consumption nationally contributed to nearly all of the third quarter increase in the real gross domestic product (GDP).
I expect revenues to rebound significantly next month, since the new California borrow from wage earners interest-free withholding changes went into effect November 1.


Max said...

Note the controller sees the increase in sales tax revenue as a huge positive, even though he acknowledges it was all due to stimulus. Is this cognitive dissonance, or political spin for the Feds benefit?

patient renter said...

I think the ability to deal with cognititive dissonance is a job requirement for any high level government official :)

Max said...

Chiang seems to alternate spin each month; maybe by spinning both ways he figures it all balances out?

patient renter said...

I think he's just trying to please all parties, the realists and the denialists.