(Retail Association of Nevada) – Based on the latest taxable sales results, it appears possible that Nevada will match national forecasts calling for 4 percent growth in retail sales for 2011, but much of this growth may be in areas other than discretionary consumer spending.
Statewide, December and fiscal-year-to-date taxable sales comparisons to the prior year are largely positive, with sales up 11.2 percent in Nevada in December and 4.9 percent for the fiscal year-to-date. Several counties are reporting somewhat less encouraging results, including Douglas, which was up just 0.3 percent for the month and is down 1.0 percent fiscal year-to-date. Washoe County reported a 5.6 percent increase in December and a 1.5 percent increase for the six month period ending in December. Carson City is up 4.9 percent in the latest month and 5.8 percent thus far in the current fiscal year. In Clark, sales are up 2.8 percent and 2.4 percent in December and fiscal year-to-date, respectively.
Notably, most of the significant growth is taxable sales activity – some of it in the triple-digit percentages and in the hundreds of millions of dollars – sourced to rural counties such as Elko, Esmeralda, Humboldt, Storey and White Pine. Sizable taxable sales gains in these counties are largely attributed to growth in sales related to utilities, mining and manufacturing equipment purchases. In other words, increases in taxable retail spending in rural jurisdictions appear to be less attributable to individual consumers, and more the result of rural industry investment. While still encouraging, much of this industrial investment is nonrecurring in nature. Looking forward, it is also worth noting that tax collection boosts resulting from the statewide amnesty program in effect the first three months of fiscal year 2011 will not benefit calendar year 2011.
Based on seven consecutive months of national retail sales growth and better than expected holiday sales, the National Retail Federation (NRF) is projecting a 4.0 percent increase in retail industry sales (excluding automobiles, gas stations and restaurants) in 2011. However, NRF cautions that rising commodity prices and continued high unemployment could become obstacles to economic growth. With the price of oil rising to a new two-year high this week as unrest in the Middle East escalates, concerns about potential stagflation conditions are not entirely without merit. In December, Clark County reported increases in sales in accommodations and eating and drinking places of 13.7 percent and 17.6 percent, respectively. However, high oil prices mean high gasoline costs and rising airfare, both of particular concern to the Nevada tourism industry. The tourism industry and visitor spending strongly affect retail sales throughout the state.
Said Mary Lau, President of the Retail Association of Nevada, “Core retailer categories reported mixed results in December statewide, with pockets of both encouraging results (i.e. automobiles, clothing, Internet retailers) and less encouraging results (i.e. sporting goods, hobby, book and music, building materials, general merchandise sales). With continued growth in mining and mining-related activities, it is likely Nevada will report gains in taxable sales consistent with national expectations for 2011. However, it remains to be seen how much of that growth will be attributed to substantial improvement in consumer discretionary spending in our larger metropolitan areas, as opposed to relatively isolated growth occurring in our more rural areas.”
