Government revenue shortfalls: Blame the weather, the economy or the internet?

The snowfall and storms that made for an  extremely tough weather winter in the northeast has also been made the scapegoat and the excuse for all things that point to an economy that may be rolling over!

Whether it’s corporate earnings misses or a slowdown in home sales and new construction, economists and financial pros all like to point to the weather as being one of  the driving forces behind the weakness.

And, when it comes to retail sales, the consumer buying goods over the internet rather than in brick and mortar stores is used as an additional reason why any forecast misses have occurred.

What is clear is that a reason typically not given for any slowdown in the economy based on data is that, after chugging along at subdued levels since bottoming in around 2010, the country may in fact be slipping back towards a recession.

So I ask you: Is weakness in reported economic data due to a struggling economy that may be rolling over, the weather or possibly some other factors such as internet sales? Or is it a combination of all three?

We will just have to wait and see as time and data continue to move forward but, in the meantime, here is a story out of Nassau County, New York  from Friday that reports sales tax revenues came in 15% below forecast at a time that couldn’t be worse for the government (and the residents) there!

‘Nassau County’s sales tax revenue declined by 14.8 percent for the first three months of this year, the largest drop in collections since the economic collapse of 2008, according to county finance officials…

…Nassau collected $35.3 million less in sales taxes this year compared with the same period last year, even as county officials are counting on higher-than-budgeted sales tax revenue to help pay the cost of amended union contracts that moved toward ending a three-year wage freeze for much of the workforce…

…Nassau Comptroller George Maragos warned Friday that the sales tax decline may signal “longer term trends that are beginning to surface: the nearly flat income growth and the accelerating shift to Internet retailing.”…

…Officials in both counties (Suffolk County) blame the harsh winter for the decline in sales tax revenue; Nassau also cites a falloff in superstorm Sandy spending that boosted sales tax proceeds last year…

…The only time in more than a decade that sales taxes declined year over year in Nassau was in the aftermath of the 2008 stock market collapse. Revenue dropped by $8.85 million in 2008 and $73.6 million in 2009, according to the county records…‘ (Source)
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