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Posted on March 3, 2017 at 8:49 AM by Paige Worsham
Current estimates show the NC Dept. of Revenue will distribute $304.9 million in sales tax revenues to our counties and cities. This represents a $34.5 million increase over the previous month and a $17.3 million improvement from the same month last year.
And once again, when Articles 43 and 46 are excluded (as these are not utilized in all 100 counties), the pattern remains essentially the same.
These numbers represent a year over year increase of 6.66% and 6.55% respectively in local sales tax distributions. This suggests some growing strength in the local sales tax base, presumably due in part to the legislative base expansion and increased compliance with those changes.
State sales tax collections, year over year, are still coming in a little ahead of local collections with 7.86% growth.
This uptick at both the state and local levels is well in line, and a little more positive, with some of the most recent economic data. The US Bureau of Economic Analysis (BEA) reports that on a national level, for January 2017, personal income increased 0.4%, disposable personal income increased a little less at 0.3%, and personal consumption increased a slight 0.2%.
Looking ahead, the predictions for the future vary depending on where you “sit” in the financial world. Economists continue to anticipate growth for 2017 around 2.0% - 2.5%. Some, like Wells Fargo Commercial, have made small upward adjustments in their forecast, to 2.5%, in anticipation of expected federal personal income tax cuts. However, due to the uncertainty surrounding other factors, like ACA repeal and replace, and the anticipated federal spending expansion, forecasters are reluctant to make significant shifts. Some also note that the underlying economic fundamentals, such as those we discussed in our last bulletin, continue to be weak. Any large scale positive economic impact from deregulation and potential tax relief is not yet included in their economic forecasts.
Business leaders, on the other hand, are generally more optimistic. Each year PwC conducts an international survey of 1,379 Chief Executive Officers (CEOs), including 114 located in the United States. This survey looks at a number of issues related to the future for business and the economy for the next twelve months to five years. The most recent survey, just released by PwC, includes the headline “US CEO confidence lifts, on hopes for improved economic momentum and potential tax relief” (20th CEO Survey, PwC, p. 4). As the graphics below indicate, CEO confidence is high, primarily due to expectations around tax relief. However this optimism is tempered somewhat by concerns over trade protectionism and anti-globalization sentiment.
Similar results are seen when only Carolinas’ business leaders are surveyed. Generally executives reported that business conditions improved in both January and February. They also indicated that “they remain optimistic about activity moving forward” (Regional Survey of Business Activity, Carolinas Survey of Business Activity, Federal Reserve Bank of Richmond, p. 1). It also suggests that the region’s economy is experiencing moderate expansion, and that expansion is expected to continue for the next six months.
Only time will tell if the optimists or the pragmatists are correct.