NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Economist Michael Austin believes there may be some future issues found in what on the surface seems like a positive sales tax report for the state.
"Even though we saw tax day had a better than expected gain, Kansas consumption, I saw, decelerated massively, suggesting that massive inflation might have blunted consumer confidence here in the free state."
Austin agrees with other conservative economists that the Fed raising rates is the right thing to do, but it may be too much and too late.
"The Federal Reserve needs to, of course, raise rates in a way that it discourages bad investments, but maintains productivity within consumers and businesses," Austin said. "Historically, that has been very hard to do. It is likely that we'll see another recession within the next one to two years."
The point of Austin's question is that Kansans are not buying like they used to even a few months ago.
"Year over year growth for Kansas purchases of sales taxable items was 18.4%," Austin said. "That included a roughly 8.5% inflation hike. Now, in this April report, sales are down to 4.8% growth. Not only is that a quarter of March's growth, but it's even smaller than March inflation. It means Kansans can't keep up with rising prices and now they're pulling back."
That also could mean times for tax policy in coming months and years won't be as flush as we have seen recently.