Today’s newsletter is short and sweet (at least by my standards), with just two parts:
• May’s “Where is Our Economy Heading?” Survey
• Jackson Hole’s Economy: March Sales Tax Data
In a hurry? CLICK HERE to go straight to the May “Where is Our Economy Heading?” survey.
As always, thank you for your interest and support. And please, stay healthy.
May’s “Where is Our Economy Heading?” Survey
In April, I developed a “crowd source survey,” asking respondents for their guess about how Teton County’s economy might fare over the next year.
I was over-the-moon thrilled when 857 people responded. Plugging their guesses into a model of the local economy I built, the consensus estimate was that Teton County would see around a 40% drop in taxable sales in 2020.
Because there was such great interest in the survey, and because so much about COVID-19 is changing so rapidly, I decided to run the survey monthly. To that end, will you please CLICK HERE to take the May version of the “Where is Our Economy Heading” survey? It should take you about 10 minutes.
Will you also please share this link with as many people as you can, urging them to complete the survey? I ask because the more people who complete the survey, the better the chances its results will be useful.
Please note that the survey closes Wednesday, May 13
Once the survey is complete, I’ll plug the results into the model and share them with readers of this newsletter, plus everyone else who completes the survey.
If you have any questions, comments, or the like, I’m happy to answer them.
Thank you for both completing the survey and encouraging others to do the same.
Jackson Hole’s Economy: March Sales Tax Data
Earlier this week, Wyoming’s Department of Revenue issued its April sales tax report, which generally reflects sales in March. Because Jackson Hole’s economy basically shut down halfway through March, this report offers the first hard look at COVID-19’s effects on the local economy. What do the numbers tell us?
A HUGE Caveat
In the opening paragraph, I noted that the April report “generally reflects sales in March.” This is because the report shows the sales taxes received by the state in April, regardless of when the sale was made.
What this means is that if a sale were made in January or February but the tax payment didn’t make it to Cheyenne until April, it was counted in April’s report. Similarly, if a sale were made in March but the check didn’t make it to Cheyenne until May, it would be counted then.
To put it mildly, this is a sub-optimal system, and historically leads to some wildly variable numbers in any one month. However, it’s the system we have, so let’s make the best of it.
From a taxable sales perspective, Teton County was off to a rousing start in 2020: January’s total taxable sales were 6.6% ahead of January 2019’s figure, and February’s 13.3% increase was literally twice as strong. Further, this strength was across the board, with every one of the major sub-categories of sales showing growth in 2020’s first two months: Core Retail (i.e., without building materials); Lodging; Restaurants; Construction & Building Materials; Government (i.e., vehicle purchases); All Other; Lodging Tax; and Resort Tax.
Then came March. The Jackson Hole Mountain Resort closed on March 16, and Grand Targhee a week later. With that, the spigot of tourist money coming into the community was essentially turned off.
To explore the consequences, I looked at both Total Sales and three major groupings of sub-categories: Core Retail (the single largest category of taxable sales); Lodging and Restaurants; and All Other.
In March 2019, Teton County merchants reported $114 million in total taxable sales, the fifth consecutive year of taxable sales growth for that month.
In March 2020, merchants reported $87 million in total taxable sales, a 23% decline. This took total taxable sales for the month back to the levels seen in 2015-2017. It was also the biggest drop seen in any first quarter month since 201o, the heart of the Great Recession.
As suggested above, “Core Retail” is my phrase for the broader Retail category without building materials, which I combine with Construction.
Because Core Retail is the single biggest category of taxable sales, between 2015-2019, this category also showed five years of consecutive sales growth in March.
In March 2020, Core Retail sales dropped from 2019’s $29.6 million to $27.0 million, an 8.9% decline, but still 3% higher than 2018’s figure.
Lodging & Restaurants
In March 2019, Teton County’s hoteliers and restaurateurs combined to sell a total of $44.0 million in taxable goods and services. This was nearly 50% more than the figure in March 2017.
In March 2020, the community’s hotels and restaurants combined to sell $26.3 million in taxable goods and services, a 40% drop from 2019. This was the lowest March figure since 2012.
In March 2019, the combined taxable sales of everything that wasn’t retail, lodging, or restaurants totaled $40.2 million. As with Total and Core Retail sales, this was the fifth consecutive year of growth.
In March 2020, that combined total figure dropped to $34.1 million, a drop of 15% from 2019.
To repeat the HUGE caveat, the numbers reported out of Cheyenne in any one month can be awfully squirrelly, so it’s not wise to read too much into the March figures.
That noted, the only category of taxable sales that was up in March was Construction; i.e., the category least susceptible to the fact that Jackson Hole’s tourism economy fell off a cliff.
In contrast, the four categories of taxes related most closely to tourism – Lodging, Lodging Tax, Restaurants, and Resort Tax – saw huge drops.
The other categories – those somewhat tied into tourism, but not as closely as Lodging and Restaurants – fell in-between.
Why is this significant? Well, if tourism is to Jackson Hole’s taxable sales economy what the canary is to a coal mine, then the March data suggest two things.
First, it confirms what we already know: Jackson Hole’s tourism economy hit a wall in mid-March. And if the state’s numbers can be trusted, that wall knocked perhaps 40% off of the month’s tourism revenues, a dramatic reversal from January and February.
Second, to state the obvious, until tourism picks up again, the areas of our economy directly tied into tourism will do less and less well (these are the areas in red in the graph below).
To state something less obvious though, let me switch animal metaphors. The money that comes into the community through tourism moves through our taxable economy in a way somewhat akin to a rodent of unusual size moving through a boa constrictor. As a result, all those areas not as directly tied into tourism – the blue bars in the graph below – will also eventually perform less and less well.
Tying this observation to the April survey and my model of Teton County’s economy, it seems likely that, when the state’s numbers come out, both April and May will not only show significant drops in taxable sales directly related to tourism, but in an increasingly larger swath of industries.