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Sep 11

Sales Tax Distribution Report & Advice

Posted on September 11, 2017 at 11:38 AM by Paige Worsham

September 2017
July 2017 Collections - September 2017 Distributions
Linda S. Millsaps

In September, North Carolina local governments are expected to receive $295.23 million in sales tax distributions, based on July 2017 sales. This is a significant increase from June, which has been the trend in past years. It is also almost a $14.0 million increase over the same month last year.


As you will recall, we suggested last month that the lower than expected collections could be a result of an unusually high level of refunds. A look at the year over year percentage graph that follows indicates that last month could well have been an anomaly.


The graph excluding Articles 43 and 46 begins to return to a more traditional pattern as well.


The Current Economic Situation

Most economists agree that North Carolina is continuing the trend of slow and steady growth. End of July figures indicate that 6,242 new residential housing permits were issued in the month. That is an increase of 15.4% from June and 5.4% from the previous year. This is very good news given the state’s dependence on construction for economic growth and our recent string of low construction months.

Similarly, unemployment remained low throughout most of the state. The local unemployment rate in every Metro area of the state, except one, was unchanged or lower. The only area that increased was Asheville, where the rate moved to 3.4%, still the lowest unemployment rate in North Carolina. Unfortunately, four counties – Wilson, Edgecombe, Halifax, and Scotland – still have unemployment rates in excess of 7.0%. The unemployment rate is above 6% in another eight counties.

National financial indicators also continue to be positive. The graph below shows the weekly average Standard and Poor’s (S&P) index for the last two years. This measure includes the 500 publicly traded companies in the leading industries in the United States economy. It shows continued positive movement of large industry stock value.


Looking Ahead

There are no specific economic threats to the North Carolina economy. However, there are several items that we should continue to watch for potential financial ramifications.

1. The impact of continuing Hurricane activity in the nation and in North Carolina. Hurricane Harvey clearly had enormous and devastating impacts in Texas and Louisiana. Forecasters have now designated Irma as a Category 5 hurricane, with an unclear trajectory. Such large storms could have a large, negative impact on the region, the state (particularly if it makes landfall in North Carolina), and the nation.
2. Oil prices – High oil prices tend to impede the economy and squeeze out purchases of other items. The graph below shows two key measures of oil prices: the European Brent Spot Price and the Cushing OK Spot Price. Continued hurricane activity in the gulf region could significantly impact price levels.
3. Geopolitical uncertainty – As mentioned in previous months, the economy, while growing, continues to be relatively fragile. As such, a significant escalation of military or similar activity on the Korean peninsula or elsewhere could have a very negative effect.


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