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Nov 14, 2022
Taxable Retail Sales Recovering

Consumer spending levels provide a critical measure of the performance of the national economy as it accounts for roughly two-thirds of economic activity. In Southern Nevada, taxable retail sales, the measure of spending activity, have reflected the economy’s roller coaster of decline and rebound through the pandemic and recovery. After dipping in early 2020 and slumping into early 2021, taxable retail sales in Southern Nevada have maintained a steady growth trajectory that pushed taxable retail sales to all-time highs.

Overall, taxable retail sales in Southern Nevada have been steadily climbing since spring 2021, a period that included the rollout of COVID-19 vaccines and a new round of federal stimulus payments that injected $1.9 trillion into the U.S. economy. On a trailing 12-month basis, taxable retail sales reached a record high of $60.0 billion in July 2022, the 13th consecutive record-setting month. That total was 25.5 percent higher than the pre-pandemic high of $47.8 billion in February 2020.

After that peak, the pandemic and related response soon followed, and taxable retail sales experienced steep declines as consumers stayed home and businesses scaled back operations or closed. The sales slowdown lasted a year, with trailing 12-month taxable sales bottoming out at $41.1 billion in February 2021. Over that time, taxable sales fell by $6.8 billion, or 14.1 percent. The restaurant and bar industry was responsible for a majority of that decline as sales collapsed by 45.7 percent, or $5.0 billion, over that time. Clothing store sales also fell significantly, losing $1.3 billion, or more than a third of pre-pandemic sales. On a positive note, taxable retail sales for nonstore retailers, such as Amazon and other online stores, more than doubled from $1.6 billion to $3.3 billion.

Due to the extended recovery period through the end of 2021 and into 2022, taxable retail sales totals for the vast majority of industries have fully recovered and exceeded their pre-pandemic peaks. Although the food services and drinking places industry, which is the largest in terms of taxable retail sales, had rebounded a modest 7.5 percent over the February 2020 peak, other top categories were well into double-digit rebounds. Motor vehicle and parts dealers (+27.5 percent), general merchandise stores (+19.2 percent), clothing and clothing accessories stores (+24.5 percent), building material and garden equipment and supplies stores (+56.1 percent) and nonstore retailers (+131.5 percent) posted gains that reflected the broad rebound in consumer spending.

That rebound is tempered somewhat by the current inflationary environment, with inflation trending at four-decade highs. When adjusted for inflation, the gains in taxable retail sales compared to their pre-pandemic peaks moderate to varying degrees. For example, the growth in total taxable retail sales declined from 25.5 percent to 13.2 percent, while the food services and drinking places industry was still trailing its pre-pandemic peak by 3.0 percent. The other top industries were still beating their pre-pandemic peaks, though by smaller margins.

Ongoing concerns over inflation, rising interest rates to fight inflation, and the spillover effects on employment that may materialize in the months ahead could affect consumer confidence and spending activity in the future. However, for now consumers in Southern Nevada have shown few signs of a pending pull-back at cash registers and computers across the region. To keep up to date with city of Las Vegas data from Applied Analysis, visit the community dashboard.

Photo: View of Main Street toward the Strat

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