Taps Coogan – August 2nd, 2023

State and local tax revenues have started contracting as of the latest data from the first quarter of this year:

That marks only the fourth time since at least 1948 that this has happened. The prior three are the post-Dot-Com recession, the Global Financial Crisis, and the Covid lockdowns.

Of course, tax revenues spiked to their highest levels ever in 2021 thanks to higher inflation and surging markets, meaning that this year’s decline still hasn’t brought the trend back to its pre-Covid growth trajectory.

Add this to the list of indicators that, when looked at on a rate of change basis, suggest a recession of sorts is unfolding, but, when looked at relative to the pre-Covid trend, tells of more nuanced story.