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Arkansas Retail Sales – 2023

Editorial Note: We haven’t been reporting regularly on Arkansas Retail Sales lately, but we have continued to refine and improve our methodology (as described in the notes at the end of this post). Constructed using sales tax collection data at the county level, our Arkansas Retail Sales Indices estimate total sales to consumers from the retail trade and food service sectors. They are intended to be comparable to the Retail Trade and Food Service Sales data published by the U.S. Census Bureau.

Total retail spending in 2023 was 2.4% higher than the previous year—comparable to the 2.6% increase in U.S. retail sales. These growth rates were sharply lower than in the previous two years, and after adjusting for 4.1% CPI inflation represent negative growth in real consumer spending.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

Quarterly indices for total retail sales show that growth slowed significantly during 2022 and has been fairly flat over the course of 2023 (with both U.S. and Arkansas indices taking a slight dip in the second quarter). After the rapid growth period in late 2020 and 2021, retail spending is approximately 37-38% higher than in 2019.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

One sector that continues to show higher spending is the Food Services and Drinking Places. In the fourth quarter of 2023, spending was 10.1% higher than a year earlier in the U.S. data and 5.3% higher in the Arkansas data. It’s probably no coincidence that prices of “food away from home” continue to rise faster than other consumer prices.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

An example of one sector where sales have fallen over the past two years is Furniture and Home Furnishings. Since 2022:Q2, sales in this retail sector declined by 10.0% nationwide and by 18.4% in Arkansas.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

In contrast, General Merchandise Stores—which includes warehouse clubs and supercenters—continued to see strong sales growth, particularly in the Arkansas data.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute

All of these series are nominal; i.e. not adjusted for inflation. After adjusting for price changes as measured by the Consumer Price Index, real retail spending has been declining since early 2021. As of the fourth quarter of 2023, real spending was about 14% higher than four years earlier (about a 3% annual rate of growth). Some of that growth is likely attributable to the persistent shift of consumption towards goods as opposed to services that we’ve seen since the pandemic. Spending on services is underrepresented in the retail sales sectors, relative to broader measures like total personal consumption expenditures.

Sources: U.S. Census Bureau, Arkansas Economic Development Institute, Bureau of Labor Statistics

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Methodological Notes:

Indices of Arkansas Retail Trade and Food Service Sales are constructed by the Arkansas Economic Development Institute using tax collection information from the Arkansas Department of Finance and Administration.  Documentation of our original methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

As we have accumulated additional data, we have made several methodological adjustments:
1. With more observations, we are now able to use a more sophisticated seasonal adjustment technique. We now use the Census X-13 ARIMA procedure, with new seasonal factors estimated at the end of each calendar year.
2. Early series for Saline County, which had been calculated using municipal tax collection data, have been spliced together with data from after the introduction of a countywide sales tax in 2019.
3. Greater care has been given to identifying and adjusting for significant outlying observations, particularly with respect to month-to-month variations.
4. Automobile sales data, constructed from an index of number of vehicles sold, has been augmented by adjusting for price changes using CPI data for New and Used Vehicles.
5. We also made adjustment for the different timing of tax collections on motor vehicles. That is likely to require additional attention after the recent change from a 30-day to a 60-day grace period for registering newly purchased vehicles.