Although you wouldn’t gather it from reading the writings of most economists or the popular media, gross domestic product is not a real thing. It’s not measured by adding up everything going on in the country. It’s estimated. There are probably as many ways of estimating GDP as there are people trying to estimate GDP.
One of my favorite ways of gauging whether there’s more or less economic activity than there was last year is from what the states say they’ve collected in taxes. That’s no estimate. Believe me, the states keep very close track of what they receive.
The Census Bureau is reporting the 2014 survey of what the states have received in revenues and here are the highlights:
State government tax revenue increased 2.2 percent, from $847.1 billion in fiscal year 2013 to $865.8 billion in 2014, the fourth consecutive increase, according to the U.S. Census Bureau’s 2014 Annual Survey of State Government Tax Collections.
General sales and gross receipts taxes drove most of the revenue growth, increasing from $258.9 billion to $271.3 billion, or 4.8 percent. Severance taxes increased 6.0 percent, from $16.8 billion to $17.8 billion, and motor fuel taxes increased 3.4 percent, from $40.1 billion to $41.5 billion.
That’s complicated even farther because the states change rates from year to year, sometimes increasing rates, sometimes decreasing, sometimes (like Ohio) increasing some and decreasing others, cf. here and here.
My back of the envelope calculation suggests that 2.2% growth for 2014 is probably a ceiling rather than a floor, that is, I doubt that there was more than 2.2% year-on-year growth and there may well have been less. What does that mean? To me it means that when inflation is taken into account if the economy is growing at all it’s growing very slowly, maybe so slowly that it’s not fast enough for us to measure.
We’ve got to do better than this. The recovery such as it has been won’t last forever. They tell us we’ve been in recovery now for 70 months. It sure doesn’t feel like it.
I see that Ford is about to invest about $2.5 billion in a new engine plant. Yay! Oh wait, in Mexico. Who gives a fuck?
Something like 3800 new jobs will be created. The good news is that’s 3800 people that won’t be trying to cross the border into America.
I think that’s an interesting approach, but I wonder if the states with the highest and lowest percentage increase in total tax revenues:
North Dakota: Up 15.5%
Alaska: Down 33.9%
Are the result of oil.
The regional Feds call down of GDP has been well documented, as have plunging credit apps.
FWIW. Two of our particularly GDP sensitive companies have falling order books. Down 10% YoY.
In 2009 you could walk into nearly any restaurant at any time and get seated. You rarely needed hotel reservations. You could get a flight anywhere pretty easily. Foreclosure signs were common. Even Walmart wasn’t that busy. Now the stores are busy, you need reservations. Foreclosure signs are uncommon. We have clearly had some significant recovery, but are nowhere near where we would like to be. Since the “growth” of the early 2000s was nearly all a bubble, and it mostly went to one sector, for which we have little to show, I strongly suspect we are back to where we would have been absent that bubble. Of course the bad part about the last bubble is that it was international in nature and destroyed millions of lives, except for (the most part) those who created it.
Steve
Some places have recovered more than others. Chicago not so much. That Chicago didn’t participate that much in the housing boom makes it all the more painful.
Naples, FL is absolutely booming. Scottsdale as well. The “bounce back” area of Asheville, NC to Greensboro, SC is doing well. The common thread there is the electromotive force of baby boom second homes and retirement, fueled by the rebound in the financial asset bubble. Who is it? I can speak to all three of those areas directly. It’s people from MN around the Great Lakes all the way to PA, western NY and NJ. Prospects in the Chicagoes of the world are not exciting at all.
Energy and business environment has certainly driven some spots, including the Dakotas and of course TX. That situation is just now playing out. I don’t know much about CA but Ag appears to be in real, if temporary, trouble there.
Almost all the regional Fed offices have called down GDP forecasts by about half, and the Atlanta office to essentially zero. Manufacturing order and production rates are now lagging, and despite notions of consumer deleveraging, the decline has left the absolute value still far above historical levels. Throw in student loan issues, auto a creature of subprime driven lending and now Freddie and Fannie making concessions to less creditworthy home borrowers and you don’t exactly have an economy built on pillars of strength.
We’ve seen real estate bounce back in Central Florida – on the upper half of the scale. (Roughly, anyway. I suspect it’s more the upper third or upper quarter.) We’re even seeing new development – where the cheap houses start in the 360s. (That’s the beginning of the high end down here.) The bottom end is still in the tank. Property values in my neighborhood dropped by almost 80%, and we’ve recovered maybe a quarter of the loss, tops. It also seems that some of the boom in the upper end is wealthy foreigners parking some of their wealth here. I expect that this will work out slightly better for them than it did for the Japanese buying commercial real estate state-side back in the 1980s.
The tourism/hospitality business is booming, no question about it. Expansions have started at most of the parks again, exclusing Sea World which is getting hammered by the SJWs. (They seem to think Sea World will continue doing all its rescue work when they’re in bankruptcy. Yes, I’ve heard this. The animal rights wing of the SJWs is composed of drugged addled retards.)
But this recovery seems to be catering to a wealthy brand of tourist, given the various amenities being provided. A trend started in the late 1980s of cutting off the bottom end of the tourist trade to focus on the groups with money. That’s going to continue until the only people going to the parks are super-rich. The middle-class folks I know that have traveled down here have done it as once-in-a-decade or less kind of trips. This isn’t the broad kind of tourism we saw during previous decades. The numbers are hiding this a bit as we increasingly draw (wealthy) tourists from all over the world.
So we’re getting more service jobs to make certain the needs of the wealthy are well provided for. Before long we’ll all be just a bunch of coolies.
Drew, we need a new T. E. Lawrence to explain the Pillars of Economic Strength in America.
But this recovery seems to be catering to a wealthy brand of tourist, given the various amenities being provided.
Ice, I think the same can be said for any recovery in CA. The upper income properties are selling at a fast clip. Water rationing doesn’t seem to bother these same high-end people, as they can afford to pay surcharges for their over-budgeted quantities of water. Most of the new businesses also seem to be sprouting up in mainly the affluent and tourist-oriented spots along the coastal areas.
Nonetheless, the central valley and inland areas continue to experience a less-than-wonderful recovery. And, agriculture remains the culprit of over-consumption criticism, along with some of the highest UE figures in the state. In the meantime, due to environmentalists demands, this year alone 2.4 million acres of precious water was released from the delta into the ocean rather than being pumped for much needed agricultural purposes in order to protect the lives of delta smelt. Also, over 90% of CALPERS pension funds continue to be invested out of state for a higher yield, rather than contribute to much needed water projects in our own state.
Our priorities and investments are truly misdirected here — something that will catch up with us should draught conditions see no relief.
Ice
Naples is growing ever more into a play land for the wealthy. Which means, for me anyway, less desirable. To your point, “low end” housing still lags. That kind of means under $400-$500k. Think about that. The European invasion has subsided although the German contingent remains noticeable. The Chinese and pure investor class seem to have stayed more in Miami.
Naples proper now resembles Newport or a fashionable CA community. The private jets in and out on Sunday afternoon form a steady stream. This group includes small business owners who are “taking a rest” and running their businesses for cash, a phenomenon I’ve been writing about here for years. It includes coupon clippers who think the stock market is just dandy. We now have a few rock stars. And of course the support professions of medical, legal, personal investment and entertainment.
I know there are those who will say tax it away, but that would only run the government for a matter of days. This is a structural problem. Dave wrote a piece essentially saying a pox on both houses recently. That’s fine. But the common thread is big government designed to benefit those with influence. Until the argument can be partitioned into large vs smaller govt intrusion instead of party I don’t see much changing. Witness a rich former First Lady annointed to a Senate seat masquerading as a populist.
Rich? Dude, didn’t you hear? Bill & Hill were _poor_, man! Like ghetto poor! They might’ve ended up living with me in the hood if she hadn’t gotten that contract job. (Six yr contract, natch.)
I’m not surprised by the dollar amounts on housing you posted, Drew. Land’s just cheaper away from the coast.
I do not know if you saw this, but you might be interested. I am just passing through, and this looked like a good spot to drop it.
Credit Swap Event Triggers for Chicago Schools: Out of Cash in 30 Days, Cooking the Books to Oblivion:Rauner Ponders Bankruptcy; Emanuel Out to Destroy Middle Class
That is a very interesting post, TastyBits. Thank you.
Just to fill in a few of the blank spaces the Chicago Public Schools and the City of Chicago are distinct taxing entities, that is the CPS doesn’t need the mayor or the city council to raise taxes, issue bonds, etc. The teachers’ pension fund is distinct from the city’s public employee pension fund which are both distinct from the state’s teacher and public employee retirement funds.
The state restricts how much and how fast cities and other taxing bodies can raise taxes. Chicago and CPS, as I have mentioned before, have just about reached the end of the line on tax rate increases. It’s not entirely clear that raising rates will raise more revenue anyway.
Under state law can the CPS declare bankruptcy? I suspect they’d need a specific act of the legislature to do that and enacting such a law would be political suicide for the legislators.
It’s a real mess here in Illinois.
Just did the research. Under state law the CPS cannot declare bankrutpcy. As I suggested above that would require an act of the legislature.
I am not sure how it is now, but at one time each parish/county had a levee board in charge of the levee and its funds. There were also boards for each toll bridge. This is in addition to the School Boards and such. All were populated with somebody’s brother-in-law, cousin, nephew, etc.
New Orleans is/was like Chicago in that they are a state within a state. The state laws and constitution have numerous exemptions and special setups for New Orleans. Entergy NOLA (electric company) is separate from the rest of Entergy, and New Orleans sets their rates.
Another link from Mish:
America’s Pension Problem: Gordon Long Interview of Mish
I don’t know what the relationship between New Orleans and the rest of Louisiana is but here in Illinois Chicago and its suburbs (what are referred to as “the collar counties”) pay a disproportionately high percentage of the taxes and receive a disproportionately low percentage of the spending. The folklore in downstate Illinois is that it’s the other way around.
Mish has a new post on the Chicago School bond offering. He seems to have switched from the Ukraine to Chicago/Illinois as his main topic.
I only have time for my RSS reader, and even there, I am mostly just skimming the blog articles.