Despite the constant chatter of v-shaped recoveries and “green shoots” states have experienced anything but a v-shaped recovery. Budgets remain a disaster and state tax revenues are far from recovering. Many view state tax revenues as one of the purest indicators of economic health. Although lagging, it’s clear that this recovery is anything but v-shaped (via Rockefeller Institute):
“Figure 1 shows the four-quarter moving average of year-overyear growth in state tax collections and local tax collections, after adjusting for inflation. The year-over-year change in state taxes, adjusted for inflation, has averaged negative 9.2 percent over the last four quarters, down from the 3.3 percent average decline of a year ago and 1.1 percent average growth of two years ago. Real, year-over-year growth in local taxes was an average of 0.3 percent over the last four quarters, much lower compared to 1.8 percent for the preceding year and 3.1 percent average growth of two years ago. Inflation for the period, as measured by the gross domestic product deflator, was 0.5 percent.”
Source: Rockefeller Institute
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.