Arizona's monthly retail sales best since 2007

2013-09-08T00:00:00Z Arizona's monthly retail sales best since 2007By Howard Fischer Capitol Media Services Arizona Daily Star
September 08, 2013 12:00 am  • 

Arizona’s economy is showing some real signs of life, with retail sales reported to the state in July being the best in six years.

New figures from the state Department of Revenue put monthly retail sales at $4.47 billion. The last time they were that high was in 2007, before the real estate bubble burst and the state and nation headed into recession.

The numbers, which reflect what people were buying in June, show a particular jump in sales of  home furnishings.

Economist Marshall Vest of the Eller College of Management at the University of Arizona said these retail sales figures are more than just good. He said the increase is running above what has been the improving trend since the end of the recession.

Vest said the 23.5 percent year-over-year increase in sales of furniture and furnishings may reflect some monthly “volatility’’ of these kinds of numbers. But he pointed out that, even looking at that sector of the economy on a longer term, sales for the most recent 12 months are still up more than 6 percent over the prior 12 months.

Overall, the economy has not quite recovered to its prerecession levels. Total retail spending reported in July is still slightly below what it was the same month in 2007.

But Arizona State University economist Dennis Hoffman said what makes the current spending surprisingly good, both in its increase and absolute numbers, is that there still are far fewer people working now than there were before the recession.

This new report shows growth of just 1.6 percent in year-over-year sales at bars and restaurants. But Elaine Smith, an economist at the Department of Revenue, said the spending at those establishments — nearly $854 million — should not be seen as a disappointment.

She said July 2012 happened to be a particularly strong month. And the latest numbers are still 10 percent higher than in 2011.

In fact, Hoffman pointed out that the latest bar and restaurant spending is the highest for this time of year since 2004.

Less clear is what’s happening in the lodging industry.

On paper, revenue from hotels and motels took a 22 percent dive from the prior year. But Smith said that reflects a one-time adjustment. Factoring out that change puts the year-over-year change back into positive territory by about 4 percent.

Smith Travel Research, which monitors the hospitality industry nationwide, also concluded that Arizona hotels and motels enjoyed a small boost in revenues versus the same time a year earlier.

In fact, the Smith Travel report shows Arizona hotel and motel occupancy actually slipped by 1.2 percent. What kept the cash flow in the black was that the facilities were able to boost their room rates an average of 1.7 percent.

Hoffman said it’s hard to know what’s keeping spending on rooms in the state so anemic.

He said one possibility is the lasting effects of the state’s adoption in 2010 of SB 1070.

That legislation, aimed at giving police more power to detain suspected illegal immigrants, gained nationwide attention and resulted in calls for boycotts. And while casual tourism was not affected, convention planners who are booking events three years out acknowledged that they had cancellations and difficulty landing new business.

But Hoffman said the hospitality industry also could be the victim in some perverse way of the overall improving Arizona economy.

“Maybe people are feeling a little bit better and doing what they used to do and going back to San Diego,’’ he said, rather than settling for “staycations’’ close to home at a local resort. And that, he said, also would keep down year-over-year spending on restaurants.

The most surprising thing overall, said Hoffman, is the sharp increase in consumer spending despite the fact the state’s jobless rate remains at 8 percent, more than double what it was before the recession.

“We’re growing retail at a 9 percent clip with very little growth in workers,’’ he said.

“But the people that are working, guess what?’’ Hoffman continued. “They must be buying cars, they’re buying furniture and home furnishings, they’re buying clothing and accessories. They tend to be shopping at a pretty good clip.’’

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