ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + First Quarter 2007 + College of Business and Technology

THE TRI-CITIES

During the winter months all three cities enjoyed a sales rebound from the generally sluggish fourth quarter. Bristol again led in retail performance as the dollar value of retail sales jumped 12.2% to $281 million. Kingsport merchants saw sales increase 5.8% to $311 million, while Johnson City reported retail revenues of $406 million or 4.8% above the same period in 2006. Adjusted for inflation, sales volume during the January to March period increased 9.5% in Bristol, 3.3% in Kingsport, and 2.3% in Johnson City.

 BRISTOL TN-VA JOHNSON CITY KINGSPORT 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2000 947.6 -0.8 1317.1 3.8 1108.1 -2.2
 2001 929.9 -1.9 1412.4 7.2 1130.7 2.0
 2002 929.7 -0.0 1458.0 3.2 1138.9 0.7
 2003 933.7 0.4 1449.2 -0.6 1197.3 5.1
 2004 969.8 3.9 1519.4 4.8 1214.7 1.4
 2005 1007.0 3.8 1631.0 7.4 1245.6 2.6
 2006 1078.0 7.1 1681.9 3.1 1287.9 3.4
 04:1  230.4 8.8 340.6 6.9 266.1 -6.9
 04:2 219.9 6.3 373.3 6.9 303.8 8.5
 04:3 246.1 2.8 371.9 2.1 292.3 1.8
 04:4 273.4 -0.8 433.5 3.9  352.4 2.3
 05:1 226.2 -1.9 377.9 11.0 280.6 5.5
 05:2 237.1 7.8 394.8 5.8 305.6 0.6
 05:3 252.6 2.6 397.3 6.8 302.7 3.6
 05:4 291.2 6.5 460.9 6.3 356.6 1.2
 06:1 250.2 10.6 387.7 2.6 294.2 4.8
 06:2 245.8 3.7 413.8 4.8 318.0 4.0
 06:3 268.0 6.1 420.9 5.9 313.5 3.6
  06:4 314.0 7.8 459.5 -0.3 362.1 1.5
 07:1 280.7 12.2 406.3 4.8 311.4 5.8

THE METROPOLITAN AREAS

On top of a strong holiday selling season, the retailing boom in the Tri-Cities Combined Statistical Area (CSA) continued into the New Year. Over the winter months, CSA dollar sales grew 5.5% on a year-to-year basis to reach $1,454 million. Adjusted for inflation, retail activity in the Tri-Cities metro was 3.0% above same period in 2006. Turning to the counties, five reported higher dollar sales and sales volume, led by Unicoi, Carter, Washington (TN), Hawkins, and Sullivan. Sales performance declined in Scott and Washington (VA) Counties.

  TRI-CITIES CSA KNOXVILLE MSA CHATTANOOGA MSA
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2000 5100.3 0.9 9168.1 2.7 5686.4 1.9
 2001 5178.3 1.5 9212.2 0.5  5739.7 0.9
 2002 5293.0 2.2 9369.7 1.7 5699.3 -0.7
 2003 5308.3 0.3 9613.5 2.6 5708.0 0.2
 2004 5509.4 3.8 10037.5 4.4 6001.4 5.1
 2005 5742.5 4.2 10751.7 5.3 6274.1 4.5
 2006 6009.3 4.7 11307.7 7.0 6579.4 4.9
 04:1 1248.8 2.8 2317.8 8.3 1400.5 8.6
 04:2 1371.3 6.2 2492.7 4.2 1493.5 5.1
 04:3 1382.8 2.2 2492.6 1.2 1496.9 3.1
 04:4 1506.4 4.0 2734.4 4.5 1610.6 4.3
 05:1 1312.8 5.1 2365.3 2.1 1460.4 4.3
 05:2 1436.9 4.8 2637.4 5.8 1563.3 4.7
 05:3 1451.5 5.0 2653.7 6.5 1584.4 5.9
 05:4 1541.2 2.3 2915.3 6.6 1666.0 3.4
 06:1 1378.5 5.0 2553.9 8.0 1524.6 4.4
 06:2 1499.0 4.3 2867.5 8.7 1651.9 5.7
 06:3 1508.8 3.9 2824.4 6.4 1645.8 3.9
 06:4 1623.1 5.3 3061.7 5.0 1757.1 5.5
 07:1 1454.4 5.5 2766.9 8.3  1587.1 4.1

The retail picture was also good in the other metro areas of East Tennessee. During the first quarter, Knoxville MSA retail sales increased 8.3% to $2,767 million, while Chattanooga MSA retail sales grew 4.1% to $1,587 million. Adjusted for inflation, sales volume increased 5.8% in Knoxville and 1.6% in Chattanooga (compared to 3.0% in the Tri-Cities).

UNITED STATES AND TENNESSEE

 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2000 3,294,217 6.5 65,230 3.2
 2001 3,385,577 2.8 65,235 0.0
 2002 3,466,136 2.4 66,387 1.8
 2003 3,615,170 4.3 69,008  4.0
 2004 3,846,316 6.4 72,527 5.1
 2005 4,088,031 6.3 77,544 6.9
 2006 4,330,457 5.9 81,560 5.2
 04:1 883,015 7.4 16,701 7.7
  04:2 964,928 6.2 18,153 5.3
 04:3 967,749 5.0 18,268 3.4
 04:4 1,030,624 7.0 19,404 4.4
 05:1 926,888 5.0 17,647 5.7
 05:2 1,032,094 7.0 19,315 6.4
 05:3 1,041,436 7.6 19,626 7.4
 05:4 1,087,613 5.5 20,957 8.0
 06:1 999,587 7.8 18,745 6.2
 06:2  1,101,131 6.7 20,542 6.4
 06:3 1,094,291 5.1 20,527 4.6
 06:4 1,135,448 4.4 21,747 3.8
 07:1 1,040,965 4.1 19,851 5.9

During the winter quarter, retail growth was robust in the United States and Tennessee. Nationally, dollar sales increased 4.1% to $1,041 billion, while sales volume increased by 1.7%. Adjusted for inflation, U.S. retail sales have now increased for seventeen quarters in a row. In Tennessee, retail sales reached $19.8 billion, a 5.9% increase on a year-to-year basis. Sales volume was 3.4% above 2006 levels, marking the sixteenth consecutive quarter of real growth.

ANALYSIS

The picture of retail activity we see in the first quarter retail data is an improvement over the fourth quarter, especially at the local level. Retail growth has resumed in both Kingsport and Johnson City, and Bristol again reported the best overall performance. At the national and state level, the business expansion just keeps rolling right along to new levels of retail sales. Overall, the economic view in the first quarter is reassuring.

But, output growth in the first quarter seems to have stumbled. The current estimate of real GDP growth in the United States places that growth rate at about one percent. Yet consumption spending, and with it retail spending, continues to grow at the preferred three percent rate (adjusted for inflation). The problem is that households are spending that money on imported rather than domestic goods – specifically higher priced energy imports. The ballooning trade deficit is now a drag on overall economic growth.

As we have observed in previous reports, the Federal Reserve continues to be more concerned about inflation rather than an economic slowdown. The rising energy prices as well as continued tightness in the labor markets posit a cost-push threat to the price level. And despite the first quarter drop in real growth, the fed is still expecting the national economy to return to its long-term growth trends in the rest of the year.

The business picture for the region continues to be excellent. Job creation is occurring at record levels and those paychecks are showing up in the growth of retail sales. The strong national economy is providing the basis for the favorable regional and local business performance. But, any trouble in the national economy would be felt rather quickly in the region.

Technical Note. This report was prepared in June 2007. The “Retail Sales” figures used in this report are “Retail and Food Service Sales” which is the total of sales in NAICS Sector 44, Sector 45, and Subsector 722. The national retail sales estimates are issued by the U.S. Census Bureau. The state, region, county, and city retail sales estimates are based on state sales tax collections and are benchmarked to the 2002 U.S. Census of Retail Trade. The Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics is used to adjust the dollar value of retail sales into "real" or volume terms where the effects of price inflation are removed. The sales data are not adjusted for seasonality so comparisons should be made on a year-to-year basis. All dollar figures in the retail sales tables are in millions of dollars.

Data Notes. (1) The retail sales data used in this report are not comparable with the data used in this report series through 2005. Please see the retail sales report for the first quarter of 2006 for a discussion of the data changes. (2) The U.S. Census Bureau has revised the national retail sales data back to 2004. These revisions occur each year, and tend to be small. For example, U.S. retail sales for 2006 have been reduced from $4,364 billion to $4,330 billion.

More information. This report was prepared by Dr. F. Steb Hipple, Professor of Economics, and Research Associate, BBER. For more information, please contact Dr. Hipple c/o Department of Economics, Finance, Geography, and Urban Studies, Box 70686, East Tennessee State University, Johnson City, Tennessee 37614. Phone/Voicemail: 423-439-5304. Fax: 423-439-8583. E-Mail: Hipples@ etsu.edu. Website: http://faculty.etsu.edu/hipples.