Growth in Sales Tax Receipts Deceiving?

May 17, 2012

MURFREESBORO, Tenn. (WMOT)  --  Tennessee sales tax collections rose almost 9 percent in April, signaling that the pace of the state’s economic recovery is accelerating.

In some parts of the Tennessee, sales tax receipts have now exceeded the pre-recession highs of 2007.  While that’s good news, economists at Middle Tennessee State University caution the numbers are somewhat deceiving.

In a new report out Thursday morning, the MTSU Business and Economic Research Center notes that inflation has reduced the buying power of every dollar Tennesseans spend.  When inflation is taken into account, sales tax receipts are still well below pre-recession levels. 

Middle Tennessee’s sales tax collections are still off by nearly 10 percent.  Receipts in Jackson, Knoxville and Memphis are all still more than 11 percent below pre-recession highs.

The MTSU report concludes by saying that with the economy still growing by less than two-percent annually, real recovery is still a ways off.