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Preliminary data for Jan – Mar quarter shows sales tax at -0.1% YY, first decline since 2002 Q1. 21 states out of 36 reporting so far saw declines. Inflation adjusted sales tax declined in at least 27 states. Income tax was +4.7% YY thus no notable deterioration yet.

Here are the sales tax data from largest states:

Califonia -0.9
Texas +6.7
NY +4.2
Florida -6.0
Illinois +0.1
Penn -1.0
Ohio +0.5
Michigan -0.7
Georgia -3.0
North Carolina -7.6

Separately, Tennessee says sales tax dropped 5.5% in April.

The key to aggregate demand is net state spending.

If taxes fall but spending is sustained, that’s a demand add, for example.

Gross spending/taxing also has a multiplier greater than 1.

This includes states ‘borrowing to spend’ for ‘investment’ accounts.

GDP tables showed that states have cut back, reducing the size of their add to aggregate demand.

But Federal government has more than made up for it.


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