Economy is Slowing as Georgetown Increases Spending

The overall economy in the US is slowing and Texas is no exception. The following information for the Texas economy during the month of August was gathered by the Dallas Federal Reserve Bank.  The survey information is gathered from all of Texas and portions of New Mexico and Louisiana.

Retail sales declined in August, according to business executives responding to the Texas Retail Outlook Survey. After two consecutive months in positive territory, the sales index plunged from 11.5 to -3.6. Inventories increased at the same pace as last month.

The revenue index, a key measure of state service sector conditions, remained positive but retreated from 19.1 to 9.3.

Perceptions of broader economic conditions reflected less optimism in August. The general business activity index for the service sector declined from 7.9 to 2.1.

The general business activity index for manufacturing in the region for August declined to -15.8 from -4.6 for July.  Demand for primary metal manufacturing and fabricated metal manufacturing are both down as a result of the reduction in oil prices.

With respect to Georgetown, sales tax revenue is up 0.98% year to date over last year.  This is a direct indicator of how the consumer is spending in the current economic environment and is also less than 1/2 the growth rate assumed in the Georgetown FY 16 budget.  Tax revenue in Round Rock is down substantially(-1.9%) year to date.

This is not a good time for the city to be issuing more debt to be paid back by the next generation.  These uncertain times call for prudence in spending and debt issuance by Georgetown.