It is rarely a good idea to draw conclusions from one data point. And nowhere is that more true than with economic information. There are too many possible variables, including simple uncertainty.
Still, as important as sales tax and lodgers tax revenue are to the city of Durango, any blip in anticipated returns raises concerns. Accentuating that is the fact that those numbers are looked at as indicators of our local economy’s overall health, as well as the direction in which things are headed.
All that came up with the news that Durango saw September sales tax fall off by 4.4 percent compared with the previous month. Lodgers tax was off 4.8 percent from the month before. This after both had been up steadily in June, July and August.
A number of explanations have been offered, including Farmington’s energy-driven economic downturn, unease leading up to the election and increasing internet sales.
All of those could be involved, but none provides a convincing explanation. The gas and oil business has been in decline throughout the Four Corners for some time. The election had been ugly for months. Online sales have been building for years.
More likely it was something else or some combination of other things. And it is also quite possible that we will never really know.
The weather – here and elsewhere – could be a factor. So could the economy in Texas, fires in California or storms along the Eastern Seaboard. Who knows?
Two points define a line. Extending that line to try to divine something about the future is human nature but reflects neither geometry nor economics. Knowing the sales tax numbers from August and September says little about October and nothing about December.
That is particularly true in the context of year-to-date numbers. For the year, sales tax is up 2.6 percent, while lodgers tax is up 3.6 percent. And north Main sales went up in September.
Now, if we see further drops in tax revenue in the coming months – particularly without some clear explanation, such as too little or too much snow – there could be cause for concern. But a one-month hiccup is not reason to worry.
