Reminder: sales tax reporting lags one quarter behind other indicators.
Taxable retail sales rose 5.5% in the third quarter compared to the same period in 2013. Total taxable sales rose even more significantly at 9.3%.
“We are starting to see the impact of improving employment and lower gas prices on consumer spending,” says Grant Forsyth, Chief Economist at Avista.
Washington Trust Bank’s CIO Steve Scranton characterizes retail sales as “very respectable and historically in line with what I would expect.”
Shaun O’L. Higgins, Managing Principal at The Oxalis Group, LLC, says that lower gasoline prices are not necessarily showing up in retail sales increases to the extent some people were predicting. The windfall of lower gasoline prices may be being applied to savings or to pay-off of previously acquired debt, or be being spent online.
Scranton says that consumers usually wait six to nine months before spending their savings from lower gas prices.
Higgins notes the data in the Business Barometer only reflects taxable sales in Spokane County and therefore does not provide a picture of spending on non-taxable online and mail-order purchases from other states with which Washington has no tax-collection agreements.
All Business Barometer panelists mentioned the impact of online sales and their continuing erosion of tax revenue for city, county and state governments.
Scranton and Forsyth also mentioned they are closely watching car sales, which have been a big part of taxable retail sales growth over the past two years.
“Many car dealers are offering 0% down with 0% for financing,” says Scranton. “We have seen this pattern in the past. People push up their plans for buying a car to take advantage of these offers, pulling from future car sales. When 0% financing goes away, there is a big drop in car sales and we’ll see the impact on our retail sales numbers.”