Arkansas Taxable Sales Including Gasoline (ATSIG) declined by 1.0% from 2015:Q4 to 2016:Q1, following a decline of 0.5% in the previous quarter. Compared to a year earlier, ATSIG increased by only 1.0%. Much of the weakness in the growth rate of ATSIG is attributable to low gasoline prices. The average price of gasoline in Arkansas in the first quarter was $1.66, down from $1.94. As a result, spending on gasoline declined by 12.1% (seasonally adjusted).
Not all the slow growth in sales can be attributed to low gas prices, however. Excluding gasoline, Arkansas Taxable Sales (ATS) declined by 0.5% in the first quarter, following a nearly flat fourth quarter. From 2015:Q1 to 2016:Q1, ATS rose by only 1.8%. After adjusting for inflation (as measured by the price index for personal consumption expenditures), real ATS was up only 0.8% over the four-quarter period.
Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement.
Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement.
Given the state’s low unemployment and relatively healthy income growth, it is surprising that the growth rate of Arkansas Taxable Sales has been so sluggish. Since the trough of the “great recession” in 2009:Q2, ATS has increased at an annual rate of only 3.0%. Over the same period, U.S. Retail Sales have been growing at a 4.4% pace. Although the national figures are not completely comparable to ATS, the discrepancy between the growth rates of consumer spending on the national and state levels is notable. The growing share of internet shopping (which is included in U.S. Retail Sales but not necessarily in ATS) might account for a portion of the discrepancy, but is unlikely explain the difference completely.
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, U.S. Census Bureau, Institute for Economic Advancement.
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Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales. The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data. Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service. A spreadsheet of the monthly and quarterly data is available here: Arkansas Taxable Sales 2016:Q1 (Excel file).
