Yesterday’s update from the Economic and Revenue Forecast Council reports on collections between March 11 and April 10. While the economy was already largely locked down, the ERFC reminds us that data lags in reporting mean that the effects of the lockdown will mostly turn up next month.
Major General Fund-State (GF-S) revenue collections for the March 11 – April 10, 2020 collection period came in $3.5 million (0.2%) lower than the February forecast. Cumulatively, collections since February 11 are now $6.1 million (0.2%) above the forecast. Since the bulk of this month’s collections stem from February’s taxable activity, they do not yet show the effects of the COVID-19-related economic shutdowns that began in March.
The economic discussion reminds us of how well things were going before the pandemic. For example,
We have three months of new Washington employment data since the February forecast was released. Total nonfarm payroll employment rose 9,200 (seasonally adjusted) in the three-month period despite the loss of 7,200 in March. The February forecast expected an increase of 18,900 in January, February, and March. It should be noted that the reference period for March was in the first part of the month, before the bulk of the layoffs resulting from social distancing had occurred. Private services-providing sectors added 4,000 jobs in the three-month period. Construction employment increased by 3,000 jobs but manufacturing declined by 2,600 jobs including the loss of 1,800 aerospace jobs. Government payrolls expanded by 4,800 jobs in January, February, and March.
For retail sales tax, business and occupation tax and other excise taxes, taxpayers pay either monthly, quarterly or annually, depending on the taxpayer’s amount of annual income. The slowdown in economic activity due to COVID-19 really started in mid-March. For monthly and quarterly taxpayers, taxes on March activity will be remitted to the state in April and will be reported in ERFC’s Economic and Revenue Update for May. It will thus be one more month before we see a significant effect of COVID-19 on state revenues.
Nationally, the Census Bureau estimates a sharp decline in retail sales in the last month.
Advance estimates of U.S. retail and food services sales for March 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $483.1 billion, a decrease of 8.7 percent (±0.4 percent) from the previous month, and 6.2 percent (±0.7 percent) below March 2019. Total sales for the January 2020 through March 2020 period were up 1.1 percent (±0.5 percent) from the same period a year ago. The January 2020 to February 2020 percent change was revised from down 0.5 percent (±0.4 percent) to down 0.4 percent (±0.2 percent).
Retail trade sales were down 6.2 percent (±0.4 percent) from February 2020, and 3.8 percent (±0.7 percent) below last year. Food and beverage stores were up 28.0 percent (±0.9 percent) from March 2019, while clothing and clothing accessories stores were down 50.7 percent (±1.8 percent) from last year.
A glimpse of what we can expect to see next month.