Spokane Regional Business Barometer – Q2, 2014
Reminder: Sales tax reporting lags one quarter behind other indicators.
While taxable retail sales for second quarter increased 3.8% over the same period last year, it was a slower level of growth than the 9% growth from 2012 to 2013, but much better than the 1% year-over-year gain posted in the first quarter.
Total taxable sales for second quarter rose 6.6%, just slightly lower than the 8.3% increase from 2012 to 2013 and slightly higher than the 5.3% year-over-year gain in first quarter.
The recent dramatic drop in gas prices “is like a stealth wage increase,” says Steve Scranton, Chief Investment Officer for Washington Trust Bank. “But consumers typically need to see a longer pattern before it affects their behavior. The big question is whether they will spend it and boost retail sales, or use it to pay off their debt, which has been increasing.”
Shaun O’L. Higgins, Managing Principal of The Oxalis Group LLC warns, “any rise in interest rates next year will impact the rates charged on existing variable-rate accounts, most significantly, credit-card balances. The timing and magnitude of interest-rate increases could hand consumers a surprise when some bills arrive and could have a corresponding damper on new consumer spending.”
“The largest drivers of total taxable sales are construction activity and auto sales, both of which I anticipate will be weaker in 2015,” says Avista Chief Economist Grant Forsyth. “If you take these two categories out of total taxable sales, the increases for the past several quarters would have been much more modest and in line with our negligible growth in income levels.”
Scranton says he anticipates total taxable sales increases of approximately 3% for 2015, due to an expected loss in volume of auto sales.