ETSU
Bureau of Business and Economic Research
THE
TRI-CITIES
The recession continued to pummel retail activity
in the three cities during the second quarter.
On a year-to-year basis, dollar sales fell 3.9% in Bristol, 5.6% in
Johnson City, and 9.9% in Kingsport.
Adjusted for inflation, real sales decreased 2.8% in Bristol, 4.5% in
Johnson City, and 8.9% in Kingsport. In
comparison, real sales were down 6.5% in the metro area, 9.4% in Tennessee, and 8.4% in the nation as a whole. (Due to lower energy prices, the overall
price level in the second quarter was 1.2% lower than the same period in
2008. As a result, the percent decline
in real sales volume was smaller than the percent decline in the value of
dollar sales.)
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
2007 1157.1 7.3 1778.0 5.7 1283.8 -0.3
2008 1108.3 -4.2 1783.6 0.3 1327.2 3.4
07:1 280.7 12.2 406.3 4.8 311.4 5.8
07:2 267.6 8.9 423.2 2.3 312.2 -1.8
07:3 291.8 8.9 447.9 6.4 301.1 -4.0
07:4 317.0 0.9 500.5 8.9 359.1 -0.8
08:1 272.3 -3.0 417.1 2.6 300.5 -3.5
08:2 255.9 -4.4 442.1 4.5 343.1 9.9
08:3 280.9 -3.7 437.8 -2.2 330.9 9.9
08:4 299.1 -5.6 486.5 -2.8 352.7 -1.8
09:1 238.9 -12.3 395.3 -5.2 292.3 -2.8
09:2 245.9 -3.9 417.4 -5.6 308.9 -9.9
THE METROPOLITAN AREAS
During the April to June period, dollar sales in the
Combined Statistical Area (CSA) fell 7.6% to $1,452 million. Adjusted for inflation, retail volume in the Tri-Cities
metro area was 6.5% below the same period in 2008. The level of dollar sales decreased in all
seven metro counties. However, due to
the decline in the price level, Scott County saw a small increase in real
sales. Sales volume was down in Washington
(VA), Hawkins, Unicoi, Washington (TN), Carter, and Sullivan 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 11307.5 7.0 6579.4 4.9
2007 6252.0 4.0 11676.0 3.3 6776.8 3.0
2008 6174.9 -1.2 10974.4 -6.0 6577.4 -2.9
07:1 1454.4 5.5 2766.9 8.3 1587.1 4.1
07:2 1543.0 2.9 2927.6 2.1 1703.9 3.1
07:3 1548.6 2.6 2886.0 2.2 1674.8 1.8
07:4 1706.0 5.1 3095.4 1.1 1810.9 3.1
08:1 1467.7 0.9 2636.0 -4.7 1568.4 -1.2
08:2 1571.2 1.8 2837.4 -3.1 1698.3 -0.3
08:3 1563.1 0.9 2746.3 -4.8 1620.6 -3.2
08:4 1572.8 -7.8 2754.7 -11.0 1690.1 -6.7
09:1 1357.2 -7.5 2337.1 -11.3 1430.1 -8.8
09:2 1451.7 -7.6 2559.0 -9.8 1535.7 -9.6
The other metro areas of East Tennessee also continued
to suffer the effects of the recession.
In the second quarter, Chattanooga MSA sales revenues fell 9.6% to
$1,536 million, while Knoxville MSA sales were down 9.8% to $2,559
million. Adjusted for inflation, sales
volume dropped 8.5% in Chattanooga and 8.8% in Knoxville (compared to the 6.5%
decline 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 4,080,678 6.1 77,544 6.9
2006 4,287,410 5.1 81,560 5.2
2007 4,432,621 3.4 84,412 3.5
2008 4,412,886 -0.4 82,071 -2.8
07:1 1,024,460 3.2 19,851 5.9
07:2 1,125,933 3.2 21,276 3.6
07:3 1,112,268 2.8 21,059 2.6
07:4 1,169,960 4.4 22,226 2.2
08:1 1,059,840 3.4 19,669 -0.9
08:2 1,150,554 2.2 21,303 0.1
08:3 1,123,261 1.0 20,543 -2.4
08:4 1,079,231 -7.8 20,556 -7.5
09:1 951,798 -10.2 17,905 -9.0
09:2 1,042,183 -9.4 19,081 -10.4
The retail recession continued unabated during the
second quarter of 2009. In the United
States, dollar sales decreased 9.4% to $1,042 billion. Real sales were lower by 8.4%, following the
10.1% decline in the previous quarter.
This marks the sixth decline in a row, after twenty consecutive quarters
of real growth during the 2002 to 2007 business expansion. Tennessee showed a similar retail
pattern. Dollar sales fell 10.4% to
$19.1 billion, and sales volume was 9.4% below 2008 levels. Retail activity has now declined for seven
consecutive quarters in Tennessee, further complicating the state budget
situation.
ANALYSIS
The U.S. and the Tri-Cities are enduring what is now described as the “Great
Recession” since it is the most significant downturn in business activity since
the 1930s. All the various economic indicators
– employment, unemployment, production, government deficits, retail sales – show
that the second quarter was worse than the first. But the bottom point (the “trough”) of this
business cycle may be upon us. Most
analysts expect the economic recovery to begin during the third and fourth
quarters.
The items of good news called “green sprouts” are
becoming more numerous. Consumer
confidence and spending are showing signs of awakening. The “cash for clunkers” program was a
success. Financial activity and the
stock market are reviving. New home
sales have stabilized and increased in some markets. Job losses are becoming smaller, and the
decline in output appears to be ending.
Even the hard-hit manufacturing sector is stirring. The recovery may not be here yet, but the
recession is showing the classic signs of ending.
The question now concerns the strength of the recovery. Based on the feeble recoveries after the recessions
of 1990-91 and 2001, most analysts expect growth in output will be modest over
the next two years. Business conditions may
not get back to normal until 2011. As we
discussed in the last report, this pessimistic outlook anticipates slow growth
in output (real GDP), slow growth in employment, a rising unemployment rate, low
consumer confidence, and lagging consumer spending. Half of consumer spending is retail sales, so
the retailing outlook is not very good.
But perhaps we should be more optimistic. There is a minority viewpoint which is
gaining some strength. This alternative
scenario expects a more vigorous recovery phase (like the recovery in 1982 and
1983). The driving element here is the
extraordinary amount of monetary and fiscal stimulus that the central bank and
the federal government have pumped into the economy to fend off what was a very
real risk of another Great Depression.
The risk of another Great Depression has been averted. But the timely overhang of monetary and
fiscal stimulus is now available to lift us out of the Great Recession. The main impact of the fiscal stimulus is
just now starting and will peak in the next two quarters. The financial system has all the liquidity it
needs to keep the recovery momentum going.
What are the implications for the Tri-Cities? In many ways, our region avoided some of the
early downturn in 2008, but we are now suffering the full impact of the
recession. In retail sales, our local
performance will mirror the national performance. If the national recovery is weak, then retail
sales nationally and locally will reflect that situation. The same can be said for the regional labor
markets.
Technical Note.
This report was prepared in September 2009.
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
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 and Finance,
Box 70686,