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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.

Arkansas Retail Sales – 2022:Q1

The latest data on AEDI’s measure of Arkansas Retail Trade and Food Service Sales indicates that consumer spending remained robust in the first three months of the year. The typical seasonal slowdown in January and February was somewhat sharper than usual, so the seasonally adjusted measure of Retail Sales showed small month-to-month declines (-1.3% in January and -0.6% in February). Sales in March rebounded sharply, however, with  seasonally-adjusted retail sales rising 4.6%. Year-over-year growth is somewhat distorted by events last year. In particular, severe winter weather in February 2021 interrupted an acceleration in spending that resumed the following month. If we consider quarterly averages, growth from 2021:Q1 to 2022:Q1 was 10.8%.

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

A comparison with U.S. data shows that Arkansas retail sales continue to trend higher than the national average. Calculating from a pre-pandemic base period of 2019:Q4, Arkansas retail sales had cumulatively risen 33.5% as of March 2022. For the U.S., the comparable calculation is an increase of 28.2%.

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

The table below shows year-over-year growth rates for the major categories of spending in the retail sales statistics over the past two years.  Growth figures are reported for first-quarter averages. By this metric, retail sales increased 15.4% in 2021 and 10.8% in 2022. Data for the U.S. show a similar pattern, with double-digit growth in both years.

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

Growth rates among various sectors differed considerably, reflecting various rates of recovery from the 2020 pandemic/recession. The fastest-growth sector from 2021 to 2022 has been Gasoline Stations, with the increases driven exclusively by higher prices. (According to state gasoline tax statistics, the number of gasoline gallons sold in 2022:Q1 was down 0.1% from 2021:Q1.) Some of the slower-growing sectors (e.g. Health and Personal Care; Sporting Goods, etc.) has previously shown significant increases in 2021.

Retail Sales and Inflation
Of course, gasoline is not the only good that has been rising in price. Consumer price inflation was 8.0% from 2021:Q1 to 2022:Q1.  Consequently, if we adjust total retail sales for the all-items CPI, the increase in “real” (inflation adjusted) spending over that period was approximately 2.6%. After inflation adjustment, the rising trend in spending over the second half of 2021 turns out to represent little if any real growth.

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

In some sectors, adjusting for inflation can have important implications for longer term trends. For example, nominal spending at Food and Beverage Stores appears to have permanently shifted higher in the post-pandemic era. After adjusting for Consumer Prices on Food at Home, grocery and liquor store sales appear to be trending back toward pre-pandemic spending patterns.

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

Similarly, rapidly rising prices for new and used automobiles has affected the nominal vs. real behavior of the Motor Vehicles and Parts component of retail sales. In nominal terms, this component has risen 30.0% from 2020:Q1 to 2022:Q1. The CPI for New & Used Autos, however, rose 27.1% over the same period. Consequently, real spending on motor vehicles and parts is now only slightly higher than at the start of the pandemic/recession.

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

# # #

Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.
NOTE:  As of the release of data for December 2021, the seasonal adjustment procedure has been updated from the crude regression-based approach used in earlier analyses.  With data covering over four years, it is now possible to implement more sophisticated techniques. Specifically, we have implemented a version of the Census X-13 ARIMA model to seasonally adjust the data by sector.

Data for Arkansas Retail and Food Service Sales for July 2017 through March 2022 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-March-2022. The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.

Arkansas Retail Sales – 2021

The final data for 2021 are in: Arkansas Retail Sales soared in the spring, remained strong through mid-year, and ended with a fourth quarter surge.  On an annual average basis, Arkansas retail sales rose 17.6% from 2020 to 2021, compared to an increase of 19.3% in the nationwide data.  On a fourth-quarter to fourth-quarter basis, the increase was 17.4% compared to a 17.1% increase for the nation.

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

As shown in the table below, the increase in sales in 2021 included all major retail sectors, with only Food and Beverage Stores and General Merchandise stores showing less than double-digit gains.  The 2021 surge followed a relatively strong sales year for Arkansas in 2020. Cumulatively, from the fourth quarter of 2019 through the fourth quarter of 2021, Arkansas retail sales were up 28.5%, compared to 21.6% in the U.S. data.

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

Data for NAICS sector 447, Gasoline Stations, uses data for gasoline sales from the state’s motor fuel tax (gasoline is not subject to sales tax).  In addition, the treatment of automobiles in local sales tax collections means that sector 441, Motor Vehicle and Parts Dealers, tends to overstate the sales that translate to county-level totals for that sector.  Therefore, in order to compare retail sales across counties it is useful to consider Retail Sales excluding Gasoline and Autos.  Statewide, this aggregate increased by 27.0% from the fourth quarter of 2019 through the fourth quarter of 2021.  The map below shows that increases for counties across the state varied considerably.

Although retail sales growth from 2019 through 2020 tended to be strong throughout the state, cumulative growth for the two years through 2021 tended to be higher in the northern and western parts of the state, and somewhat slower in the South and East.  There is also some tendency for counties that are mostly or completely rural to have experienced higher growth rates than those that are considered mostly urban.

As shown in the chart below, the downturn in sales that is prominent in the U.S. data for April 2020 is only visible for mostly-urban counties in Arkansas. Moreover, the rapid growth of retail sales in 2020 and 2021 is more prominent for rural counties than for urban counties.  In part, these patterns reflect the nature of the economic sectors that were affected by pandemic-related closures, but the patterns also reflect the increased prominence of online sales during the pandemic.  Urban counties with active brick-and-mortar retail sectors tended to lose sales to more rural counties, as sales tax remittances are directed to the county of residence, rather than the county in which the retail outlet is located.  To the extent that e-commerce continues to represent an increasing share of total retail sales, this pattern is likely to persist.

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

# # #

Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.
NOTE:  In this release of data for December 2021, the seasonal adjustment procedure has been updated from the crude regression-based approach used in earlier analyses.  With data now covering over four years, it is now possible to implement more sophisticated techniques.  Specifically, we have implemented a version of the Census X-13 ARIMA model to seasonally adjust the data by sector.

Data for Arkansas Retail and Food Service Sales for July 2017 through December 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-December-2021.  The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.

Arkansas Retail Sales – July & August 2021

The most recent information from our Retail Trade and Food Service Sales data show that consumers maintained a summer of soaring spending during July and August.  Compared to a year earlier, the July-August average was up 15.6% in Arkansas.  In the national Retail Sales data from the Census Bureau, consumer spending was up 15.2% over the same time span.  Relative to pre-pandemic levels, the summer’s retail sales figures are even more remarkable.  Compared to July-August of 2019, the figures for this past summer were up 25.8% in Arkansas  and 18.7% nationwide.

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

A breakdown of these growth rates by industry group shows that the increased spending is across-the-board.  The smallest increases from 2020 to 2021 were sales at Food and Beverage Stores — up only 2.6% in Arkansas and 4.6% in the U.S. data.  The largest increases were in spending at Gasoline Stations, where much of the increase can be attributed to higher gasoline prices.

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

The series for Food and Beverage Stores is a prime example of a persistent change in consumer spending patterns since the onset of the COVID-19 pandemic. After surging in the early months of the pandemic as households stocked-up on supplies, spending at this subset of retailers has settled in at around 16% higher than the summer of 2019.

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

Another sector with persistently robust sales growth over the past two years is Building Materials and Garden & Equipment and Supplies.  This spending category saw increases early in the pandemic, when many areas of the country were under lockdown, and has continued to surge above pre-pandemic levels. Over the summer months of July and August, spending in this sector was up from the previous year by 13.1% in Arkansas and 7.6% nationwide.  These increases were on top of sharp gains recorded the previous year.

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

Two sectors that have shown the largest increases in sales over the past year are Clothing and Clothing Accessories Stores and Gasoline stations.  The increased spending at gasoline stations partly reflects a recovery in travel, but largely reflects swings in gasoline prices during the recession and recovery phases.  In Clothing and Clothing Accessories, the spending patterns clearly display the resilience of the Arkansas consumer sector. The initial decline in spending was not nearly as large in Arkansas as the rest of the country, and by the summer of 2020 clothing store spending had fully recovered in Arkansas but still lagged pre-recession spending levels by more than 18% nationwide.  By the summer of 2021, nationwide spending in this sector had recovered to stand 14.8% higher than in the summer of 2019.  Here in Arkansas the increase from the summer of 2019 to the summer of 2021 was 24.5%.

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

Increases in consumer spending over the past year have been boosted by unprecedented surges in personal income, as government support and stimulus programs have boosted consumers’ purchasing power.  As personal income growth returns to its longer run trend, retail sales growth will necessarily slow.  It will be interesting to see how recent changes in the mix of consumer spending across subsectors will persist.

# # #

Data on 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 Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through August 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Aug-2020.  The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.

 

 

 

Arkansas Retail Sales – May 2021

Arkansas Retail Sales declined slightly for a second month in May, but remained well above levels of a year ago or before the onset of the COVID-19 pandemic.  Total Retail and Food Services Sales were down 3%, following a 3.4% decline in April.  The two monthly declines only partly offset a 22% surge in March.  Data from the U.S. Census Bureau showed that national retail sales declined 1.4% in May.

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

Many industry groups within the retail sector declined from recent highs, with only Motor Vehicles, Electronics and Appliance Stores, and Food & Beverage stores showing monthly increases.  All sectors except for Food and Beverage stores were well above levels of a year earlier.

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

For both the state and national data, sharp increases in sales since May 2020 reflect the extent of weak retail spending over a year ago.  Clothing Stores, for example, showed a pandemic-related decline of more than 50% in Arkansas in April of 2020, while sales were down nearly 90% in the nationwide data.

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

Compared to pre-pandemic sales (in the second half of 2019) sales at Clothing and Accessories Stores are up 13.7% for the U.S., and up 23.6% in Arkansas.  Nationwide, total Retail Trade and Food Service Sales are 19% higher than in 2019H2.  The same comparison shows a 24% increase for Arkansas.

The data for May include an innovation to the measurement of automobile sales data. As described in Arkansas Retail Sales—A New Data Set from AEDI, the data on county-level sales tax collections for autos yields an index of the number of vehicles.  In the past, we have converted this index to a dollar value by scaling the total so that automobile sales have the same relative weight in the state data as in the national data, with 2019 average values as a reference point.  Sales tax receipts on most goods automatically incorporate price changes (since the sales tax is an ad valorem tax), but not so with the county auto tax.  However, price spikes in the markets for new and used automobiles have recently been quite prominent.  For example, used car prices were the single largest contributor to a surge in Consumer Price Index (CPI) in May registering a monthly increase of 7.3% and a year-over-year increase of 30%.

In order to incorporate these significant price swings in the retail sales data for Arkansas, we have applied the price data for New and Used Automobiles to the index values generated from county sales tax receipts.  The valuation base remains the 2019 average.  As shown in the figure below, the incorporation of price data has little effect on the sales data until recent months.  In May 2021, the total for Motor Vehicle and Parts Dealers was up 5.8% from the previous year without price adjustment.  After accounting for price inflation, adjusted sales are up 17.9%.

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

After accounting for the recent surge in auto prices, the data for Arkansas and the U.S. show similar patterns.  The surge in auto sales in 2020 happened earlier in Arkansas than in the rest of the nation, and the persistent increase relative to 2019 has been somewhat larger in Arkansas.  As of May, the nationwide total for sales at Motor vehicle and Parts Dealers was up 28.7% for the U.S. and up 36.6% in Arkansas (relative to the second half of 2019).

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

# # #

Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through April 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-May-2020.  The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.

[box] This month’s data required on technical adjustment of note: The raw data for Garland County showed gross tax revenue of over $5 million for the sector 4441: Building Materials and Supplies Dealers. This was up from an average monthly value of about $216,000. In fact, the entire monthly tax receipts for Garland County are typically far less than $5 million, and this particular monthly report includes an unexplained “other adjustments” to  total net tax revenue that offsets most of the impact of the outlier on the county’s bottom line.  Rather than assume that the adjustment reflects a direct offset to the reported sales in sector 4441, however, we estimated a time-series model using data from the City of Hot Springs to forecast changes in Garland County sales for that sector.  (Log first-differences of the two series have a correlation coefficient of 0.939.)[/box]

 

 

 

 

Arkansas Retail Sales – February 2021

When the national retail sales statistics for February were released, a downturn in consumer spending was attributed to a wave of heavy snow and bitterly cold weather across the country.  Arkansas being near the heart of that storm, it is not surprising that Arkansas Retail Sales showed a decline for the month.  Total Retail and Food Services Sales declined 4.9% from January (seasonally adjusted) compared with a 3.3% decline nationwide (revised data).

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

The monthly slowdown in sales was evident in nearly every retail industry group, both nationally and here in Arkansas, with particularly large declines at Clothing Stores and Health and Personal Care Stores.

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

The only exception was for sales at Motor Vehicles and Parts Dealers. As we speculated in the report for January, the inclement weather in February might have resulted in postponement of vehicle registrations, and if so we might expect for some of that overhang to show up in the data as sales in February.  That appears to have been the case.  The February data show sales at Motor Vehicle and Parts Dealers up 27.2% from the previous month, and up 22.6% compared to February of 2020.

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

Compared to February 2020, several retail industry groups are recording sharp increases, including Building Materials, etc., Food & Beverage Stores, Sporting Goods, etc.,  and Nonstore retailers (including online shopping).  Sales within some industry groups remain suppressed by the COVID-19 pandemic, including Clothing Stores, Electronics and Appliance Stores, as well as Food Services.

# # #

Arkansas Retail Sales are constructed from county-level sales tax data obtained from the Arkansas Department of Finance and Administration. Documentation of our methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.

Data for Arkansas Retail and Food Service Sales for July 2017 through January 2021 are available in an Excel Spreadsheet:  Arkansas-Retail-Sales-Feb-2021.

The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted.  County-level data for Total Retail and Food Service Sales ex Gasoline, and ex Gas and Auto, are available on a not-seasonally adjusted basis.

Leisure and Hospitality Industries in Arkansas – 2020

Of all the sectors of the economy that have been disrupted by the COVID-19 pandemic, industries in the Leisure and Hospitality category have been among the hardest-hit.  These industries continue to show persistent declines in sales and employment, with many businesses remaining at-risk while other sectors of the economy recover.

This article documents the performance of Leisure and Hospitality industries in Arkansas relative to the United States as a whole.  Using payroll employment data and statistics derived from tax-collection data, we show that Arkansas has experienced smaller downturns in the Leisure and Hospitality sector than the national average, but the data also suggest persistent declines at both the state and national levels.

Figure 1 shows the composition and relative sizes of industries within the Leisure and Hospitality sector, in terms of employment shares in 2019. The total sector represents a smaller employment share in Arkansas than in the national totals, 9.4% versus 11.0%.  Restaurants and bars account for the overwhelming share of employment within the Leisure and Hospitality sector, particularly in Arkansas.

Figure 1:
Source: U.S. Bureau of Labor Statistics

Food Services and Drinking Places
The largest subset of industries in the Leisure and Hospitality Sector comprises bars and restaurants.  As shown in Figure 2, employment dropped dramatically in April 2020, falling more than 48% from the previous year nationwide.  In Arkansas the decline was somewhat smaller—only 38.5%.  After recovering during the summer months, employment levels were still down nearly 20% nationwide and about 10% in Arkansas at the end of the year.

Figure 2:
Source:  U.S. Bureau of Labor Statistics

 Figure 3 shows sales figures for the Food Services & Drinking Places sector.  Data for the U.S. are drawn from the U.S. Retail Trade and Food Services survey, published by the U.S. Census Bureau.  Sales figures for Arkansas are derived from county-level sales tax revenue, available by four-digit industry sector from the Arkansas Department of Finance and Administration.  Tax distributions for Food Services and Drinking Places are extracted from the overall figures, adjusted for changes in tax rates, then aggregated across counties.

The percentage changes in sales shown in Figure 3 display a pattern similar to the employment changes in Figure 2.  Nationwide restaurant and bar sales plunged over 50%, while in Arkansas the drop was 24%. By October, nationwide sales remained 12.5% below year-ago levels, while Arkansas sales had recovered to near pre-pandemic levels.  However, data available for November and December suggest renewed weakness.

Figure 3:
Sources: U.S. Census Bureau, Arkansas Department of Finance and Administration, Arkansas Economic Development Institute

Accommodations
The Accommodations industry includes hotels and motels, campgrounds, RV parks, etc.  Employment in the Accommodations nationwide dropped 43% in April 2020 and was down 48% in May.  In Arkansas the decline was approximately 35.5% in both months. Employment levels in the industry remain low.  For the U.S., employment in Accommodations was down nearly 33% in December from the previous year.  In Arkansas it was down about 25%.

Figure 4:
Source:  U.S. Bureau of Labor Statistics

There are two measures of state-level sales available to consider:  in addition to the county sales tax statistics, the state collects a 2% Tourism Tax that applies directly to the service of providing “accommodation to a transient guest.” Figure 4 shows year-over-year growth rates of these two proxies for sales in the Accommodations industry.  They show very similar patterns, especially the COVID-related downturn in April which amounted to a loss of approximately two-thirds of total revenues in the Accommodations sector.

Figure 5:
Sources: Department of Finance and Administration, Arkansas Economic Development Institute

The two revenue measures diverge during the summer months, with county sales tax receipts showing sustained declines from the previous year (down 23%) while the tourism tax indicated a slightly better recovery from the spring downturn.  One possible explanation of this patterns is that the tourism tax applies solely to accommodations, while the sales tax applies to other services provided by hotels and motels, including catering, providing meeting space, etc.  The sustained decline in the sales tax measure suggests that revenue losses in the Accommodation industry run deeper than just a dearth of travelers.

To give an indication of how sales in the Accommodation industry in Arkansas compare to national trends, Figure 6 compares the Arkansas tourism tax to a national measure of revenue per available room.  Under the assumption that the number of available rooms an Arkansas has changed little over time, the national revenue per room should correspond to the Arkansas revenue measure derived from the tourism tax.  Figure 6 shows that the decline in revenues nationwide was even sharper than the downturn in Arkansas.  Revenue per room in April was down 80% from the previous year, and continues to trend 50% lower than pre-pandemic levels.

Figure 6:
Sources: Arkansas Department of Finance and Administration, STR Global.

Arts, Entertainment, and Recreation
The final set of industries to consider in the Leisure and Hospitality Sector is Arts, Entertainment and Recreation.  This category covers a wide range of industries, including Performing Arts, Spectator Sports, Museums, Amusement Parks, Gambling Industries and other various Amusement and Recreation activities.  Figure 7 shows employment in this set of industries for Arkansas and the U.S.  While U.S. employment plunged over 50% in April and May, Arkansas dropped only 12.4%.  By the end of 2020, nationwide employment was still down 30%, while Arkansas recovered to only 5% below the previous year.

Figure 7:
Source:  U.S. Bureau of Labor Statistics

Sales tax data for industries in Arts, Entertainment and Recreation are somewhat sparse.  In any specific county, data are suppressed in sectors with fewer than three firms, so the totals are likely incomplete.  Moreover, comparable sales data on the national level are available only on a quarterly basis (from the U.S. Census Bureau’s Quarterly Services Survey).  Figure 8 displays year-over-year growth rates Arkansas and the U.S.  The Arkansas figures are constructed by aggregating total county-level sales tax data for the entire set of industries, then averaging over calendar quarters.  The series for the U.S. is the growth rate of Total Revenue for Arts, Entertainment, and Recreation from the Census Bureau.

Figure 8:
Sources: Arkansas Department of Finance and Administration, Arkansas Economic Development Institute, U.S. Census Bureau

The revenue data for the U.S. show a pattern similar to the employment data.  A sharp drop in the second quarter of 2020 represented a 57% decline from the previous year, and revenues remained down more than 30% by the end of the year.  In Arkansas, the second-quarter decline was only 28.4%. Arkansas revenues from Arts, Entertainment, and Recreation recovered sharply in the third quarter, but data for the fourth quarter suggests renewed weakness.

As comparisons in other industries have shown, economic activity in Arkansas was not as severely impacted by the COVID-19 pandemic as in other parts of the nation.  This appears to be true for Leisure and Hospitality sectors as well.  Although employment, sales and revenue have partly recovered from sharp declines in the spring of 2020, economic activity in the Leisure and Hospitality industries remained well below year-earlier levels at the end of 2020.

A PDF file of this report is available HERE.

County Taxable Sales – April 2020

The Arkansas Department of Finance and Administration has published new data on local sales tax collections paid to counties and municipalities in June.  There is generally a one month lag between actual sales and the collection of sales tax and an additional month for the distribution to be made to the local governments.  Consequently, the sales taxes remitted to the counties and cities in June largely reflect sales in April – the month in which COVID-19 related shutdowns are likely to have had their largest impact on economic activity.

We had projected declines on the order of 15% on a year-over-year basis, based on the estimated impact of COVID shutdowns on retail sales.  As it turns out, most counties in Arkansas fared better than that, albeit with significant diversity among counties.  The interactive map below shows the percentage changes in sales tax receipts by county between April 2019 and April 2020 (expressed in terms of taxable sales as an adjustment for tax-rate changes).  The largest decline was in Carroll County (-21.9%), while the largest increase was Calhoun (+42.4%).

There are several possible explanations for the better-than-expected sales tax figures.  First, it might be the case that support from government transfer programs helped maintain consumer spending, in spite of income losses due to layoffs and business closures.  Second, sales tax in Arkansas is collected on more than just final retail sales to consumers; tax collections on other business-to-business transactions might have mitigated the effects of declines in retail sales.  Third, the recent change in the law that required out-of-state retailers to collect and remit sales taxes from Arkansas residents began in July 2019, so that the year-over-year comparison for April includes an expansion of the tax base.

A preliminary analysis of sales tax collections by sector for Pulaski County suggests that all of these factors contributed to the April 2019-20 comparison.  Tax collections in services categories showed the expected declines; for example, Arts, Entertainment, and Recreation was down 45.6% and Accommodation and Food Services were down 41.9%.  In contrast, Retail Trade was down only 2.0%, with large losses in some sub-sectors (e.g. Furniture stores down 29%) offset by others (e.g. Beer, Wine, and Liquor Stores up 40%).  Patterns of consumer spending were affected, but overall consumer spending appears to have fallen less than anticipated.  Increases in sales tax collections were particularly strong in the non-retail sectors;  Collections from Manufacturing (primarily from Iron and Steel manufacturing) were up 234% and taxes related to Construction activity were up 242%.

There is also evidence that the collection of sales tax from out-of-state vendors played a significant role in sustaining sales tax collections.  In the Pulaski County data, sales tax collections from Sector 4541, Electronic Shopping and Mail-Order Houses, was up 205%.  Without this component, the total for Retail Trade would have declined 8.6% instead of 2.0%.

In order to approximate an impact of internet sales tax collections on the county statistics, the interactive map below compares the year-over-year growth rate for April, relative to a trend growth rate that is calculated as the average of year-over-year changes from July 2019 through February 2020 (corresponding the the period since out-of-state vendors were required by law to collect and remit taxes).  With this adjustment, the relative performances of counties changes little, but the interpretation of the numbers is altered.  For example, the raw April-April growth rate for Garland County was -9.2%.  Compared to a trend rate of growth averaging 10.2%, the April growth rate is 19.5% below trend (after rounding).

One other factor that should be considered:  The correspondence between sales in April and taxes remitted to the counties in June is a general, but not exact relationship.  Not all tax reporters submit monthly, and the tax receipts are reported for the month in which they are received.  Any extraordinary effects of reduced taxable sales in April are likely to be reflected, in part, in subsequent monthly reports of tax remittances.

Data for city and county tax collections, broken down by NAICS-code sectors, are available for all tax jurisdictions in Arkansas.  We will continue to monitor and analyze these data in our continuing efforts to gauge the impact of COVID-19 (and efforts to prevent its spread) on the economy of Arkansas.

Note:  Monroe County has no countywide sales tax and Saline County initiated one in April 2019.  For these two counties, the taxable sales figures reported are aggregates of the cities with sales taxes in those counties.

 

Arkansas Taxable Sales – 2017:Q1

Arkansas Taxable Sales (ATS) rose 0.1% in the first quarter of 2017 — up 2.1% from a year earlier.  From the end of the recession in 2009:Q2 through the first quarter of 2017, ATS has expanded at an annual rate of 2.9%.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Gasoline prices averaged $2.11 during the first quarter, up from $2.00 in the fourth quarter of 2016.  As a result, expenditures on gasoline were up 8.0% in the first quarter and were 27.7% higher than in the first quarter of 2016.  Incorporating this source of increased spending, Arkansas Taxable Sales Including Gasoline (ATSIG) increased by 0.5% in the first quarter of 2017, and were 3.3% higher than a year earlier.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, 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:Q4 (Excel file).

Arkansas Taxable Sales – 2016

Arkansas Taxable Sales (ATS) increased 0.4% in the fourth quarter of 2016 (seasonally adjusted), and were up 1.8% from a year earlier.

With gasoline prices little changed, an increase in gallons sold pushed gasoline expenditures up 9.9% for the quarter.  As a result, Arkansas Taxable Sales Including Gasoline (ATSIG) rose 0.9%.  Compared to the fourth quarter of 2015, ATSIG was up 2.2%.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

Both ATS and ATSIG had declined over the first half of 2016, but recovered lost ground in the third and fourth quarters.  On average, 2016 was a year of slowing growth in taxable sales.  Not including gasoline, Arkansas Taxable Sales were up 1.5% for the year.  With gasoline prices down from $2.18 in 2015 to $1.91 in 2016, expenditures on gasoline were down 8.2%.  Consequently, ATSIG rose only 1.0% for the year.

Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement
Sources: Arkansas Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

# # #

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:Q4 (Excel file).