I'm starting to feel like Chicken Little. It looks like reports of slowing sales tax receipts from California and Georgia were the tip of the ice berg. The San Diego Union Tribune is reporting that half of the states (unlisted) are showing slowing collections.
About half of all U.S. states are collecting less from their sales taxes than expected, which could signal a recession lies ahead as the home market fades.
The receding housing boom could then reveal the underlying economic weakness it had camouflaged, according to Philippa Dunne, a co-editor with the New York-based Liscio Report, published by an economic research firm.
The big gotcha from this report is that it appears to use August sales tax numbers. States like Georgia and California didn't jump off the cliff until September. Some states cited in the article include Florida and Michigan.
While this looks like a nation-wide trend, this could just be a financial hiccup in response to all the mortgage craziness. So, what's a person to do? I'll keep monitoring economic indicators to see how things are going. Until things swing back, I'm tightening my lending criteria to avoid the marginal borrower and those who may be tempted to drop the loan. My tightened criteria:
- Only lend to incomes above $50k
- No current or delinquencies in the last 7 years
- No public records
- Debt-to-income limit set to 40% from 50%