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Arkansas Retail Sales – 2024:Q1

The AEDI index of Arkansas retail sales declined by 0.7% in the first quarter of 2024, while the Census Bureau’s Retail Trade and Food Services for the U.S. declined by 0.2%. Compared to a year earlier, the Arkansas measure is up by 1.2%, compared to an increase of 1.4% in the U.S. measure.

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau

First quarter sales in Arkansas were impacted by severe cold and ice in January. Nearly every retail sector showed a distinct decline in the monthly data. For example, the figure below shows sales for Furniture and Home Furnishing stores, where the decline in January 2024 is nearly as distinct as for the snowstorm of February 2021 (albeit without the sharp increase in the following month).

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau

The furniture store sector is also the most prominent among several that has been trending downward for several quarters–down 20% from a year ago. In the U.S. data, sales at furniture stores have declined by 11% over the past four quarters. Other sectors that have been declining in both Arkansas and the U.S. include Electronics and Appliance Stores, Building Materials Stores, and Gasoline Stations (the latter is primarily attributable to declining gasoline prices).

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau

Some elaboration on the Motor Vehicle and Parts Dealers data are in order:

The series on Motor vehicle and parts dealers required an adjustment to the timing of auto sales versus tax receipts during 2023. As of August 1, 2023, the time limit for car buyers to register their vehicles (and pay taxes) was raised from 30 days to 60 days. As a consequence, the timing of tax receipts relative to sales data had to be adjusted. Our approach was to assume that the lag between purchase and tax payment was a weighted average of one month and two months, with the weights evolving over the course of the year, but always summing to one. This had the effect of raising estimated auto sales during the year, and eliminating some of the volatility that emerged in the unadjusted data.

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute

Carrying the analysis forward, the data for 2024 (assumed now to correspond to a two-month lag) shows a sharp drop in March 2024. March is typically a strong sales month for autos, so the seasonally adjusted decline corresponds to an increase in sales that was not proportionately as large as is “typical”. The result is a two percent decline for the first quarter of 2024.

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau

Going forward, we will continue to evaluate the timing of sales and tax revenues for motor vehicle sales. For now, consider a measure of total retail trade and food service sales that excludes autos. The quarterly decline for this measure was 0.3% (compared with -0.7% for the total that includes autos). Compared with 2023:Q1, the measure excluding autos was up by 0.3%, rather than by the 1.2% reported for the inclusive measure.

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau

One final note to bear in mind: The sales data are not adjusted for inflation. The nominal value of total retail sales was approximately 40% higher than average spending in 2019. After using the consumer price index to adjust for inflation, the growth in real consumer spending since 2019 has cumulated to only 15%.

Sources: Arkansas Department of Finance & Administration, Arkansas Economic Development Institute, U.S. Census Bureau, U.S. Bureau of Labor