January was a tough month for sales tax collections in the Tri-Cities and across Northeast Tennessee’s other metro areas – with the exception of Morristown.
Morristown was the only NE Tennessee Metropolitan Statistical Area (MSA) with an increase and it whopper. Morristown had the largest year-over-year and month-over-month increase in the state, according to data from Middle Tennessee State University. That report shows statewide collections were 1% better than February last year, but only three of the state’s 10 metro areas were positive.
Johnson City’s MSA had the largest decline in both month-over-month and year-over-year collections in the Tri-Cities. Here’s how seasonally adjusted collections looked compared to February last year:
Johnson City, down 4.8%.
Kingsport, down 1.5%.
Knoxville, down 0.9%.
Morristown, up 4.4%.
Here’s how they stack up with December’s collections:
Johnson City, down 6.3%.
Kingsport, down 3.7%.
Knoxville, down 4.4%.
Morristown, up 5.6%.
Some of the month-over-month declines can be written off as a hangover from the holiday season. But that won’t explain why Morristown outperformed the rest of the region or the state for that matter.
Looking at the Tri-Cities, the Johnson City MSA’s collections have underperformed Kingsport-Bristol every month since August of last year. Its share of the total area collections in February was 47.8%, down from a high of 50.1% April last year.
Consumer spending nationwide in January rose a disappointing 0.2%, which was attributed to consumers cutting back after the holidays. When adjusted for inflation spending fell for the first time in a year.
January’s spending funk isn’t expected to last. Economists expect consumer spending to be back on a health trace as spring approached. Some of the positive outlook is driven by recent tax cuts. The Bureau of Economic Analysis boosted its estimate of income growth by $30 billion due to one-time bonuses handed out by businesses after the tax law passed.
A strong economy and tight labor market could begin stoking inflation, but economists don’t see price pressures getting out of hand.