ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + Second Quarter 2013 + College of Business and Technology

THE TRI-CITIES

Retail performance was mixed in the three cities during the second quarter, but was much improved over the previous period. Retail sales increased 2.0% in Johnson City to $473 million and 1.8% in Kingsport to $375 million, while falling 5.8% in Bristol to $249 million. Over the April to June quarter, inflation adjusted retail sales rose 0.6% in Johnson City and 0.4% in Kingsport, while decreasing 7.1% in Bristol. In comparison, sales volume was higher by 0.1% in the metro area, 1.8% in Tennessee, and 3.0% in the United States.

 
 BRISTOL TN-VA JOHNSON CITY KINGSPORT 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 1119.0 9.8 1855.4 6.2 1407.7 0.7
 2008 1070.8 -4.3 1848.1 -0.4 1445.0  2.7
 2009 982.8 -8.2 1760.2 -4.8 1349.6 -6.6
 2010 972.8 -1.0 1791.8 1.8 1379.9 2.2
 2011 1014.5 4.3 1888.2 5.4 1456.0 5.5
 2012 1088.0 7.3  1910.3 1.2 1491.2 2.4
 09:1 231.2 -12.2 409.6 -5.2 318.2 -2.8
 09:2 236.2 -3.8 432.5 -5.6 336.4 -10.0
 09:3 258.5 -4.9 431.6 -4.9 330.4 -8.3
  09:4 256.8 -11.5 486.5 -3.5 364.7 -5.0
 10:1 232.1 0.4 414.7 1.3 317.9 -0.1
 10:2 228.6 -3.3 433.7 0.3 342.0 1.7
 10:3 248.7 -3.8 437.9 1.5 331.0 0.2
 10:4 263.5 2.6 505.5 3.9 388.9 6.7
 11:1 228.4 -1.6 426.8 2.9 326.5 2.7
 11:2 248.1 8.6 457.5 5.5 364.6 6.6
 11:3 260.8 4.9 471.3 7.6 369.1 11.5
 11:4 277.2 5.2 532.7 5.4 395.7 1.8
 12:1 259.9 13.8 453.6 6.3 354.3 8.5
 12:2 264.3 6.5 463.5 1.3 368.4  1.0
 12:3 265.7 1.9 464.1 -1.5 361.0 -2.2
 12:4 298.2 7.6 529.1 -0.7 407.5 3.0
 13:1 243.0 -6.5 452.7 -0.2 352.7 -0.5
 13:2 248.9 -5.8  472.8 2.0 375.0 1.8
 

THE METROPOLITAN AREAS

Retail activity picked up in the Tri-Cities Combined Statistical Area (CSA) during the second quarter. Dollar sales rose 1.5% to $1,716 million, while retail sales volume increased 0.1% above the same period in 2012. This performance – while meager – did signal the end of four quarters in a row of declining real sales in the metro area. Among the seven counties, dollar sales and inflation adjusted sales were higher in Hawkins, Carter, Washington (TN) and Sullivan Counties. Washington (VA) saw slightly higher sales but retail volume was down. Dollar sales and real volume were lower in Scott and Unicoi Counties. This is a welcome reversal of first quarter performance where all CSA counties reported lower real sales volumes.

TRI-CITIES CSA KNOXVILLE MSA CHATTANOOGA MSA

 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 6643.2 4.6 12265.8 3.8 7293.2 3.8
 2008 6567.9 -1.1 11528.9 -6.0 7078.6 -2.9
 2009 6166.5 -6.1 10543.6 -8.6 6566.6 -7.2
 2010 6346.7 2.9 10875.7 3.2 6947.7 5.8
 2011 6635.5 4.6 11827.7 8.8  7341.4 5.7
 2012 6762.3 1.9 12105.0 2.4 7629.1 3.9
 09:1 1444.9 -7.4 2455.2 -11.3 1539.1 -8.8
 09:2 1544.1 -7.6 2688.3 -9.8 1652.7 -9.6
 09:3 1566.4 -5.8 2610.1 -9.5 1597.7 -8.4
 09:4 1611.1 -3.6 2790.0 -3.6 1777.0 -2.3
 10:1 1439.3 -0.4 2464.4 0.4 1625.7 5.6
 10:2 1604.9 3.9 2741.7 2.0 1756.2 6.3
 10:3 1599.7 2.1 2740.1 5.0 1718.9 7.6
 10:4 1702.8 5.7 2929.4 5.0 1846.9 3.9
 11:1 1507.8 4.8 2587.1 5.0 1670.3 2.7
 11:2 1685.9 5.0 2941.7 7.3 1842.3 4.9
 11:3 1684.6 5.3 3057.0 11.6 1878.7 9.3
 11:4 1757.2 3.2 3241.9 10.7 1950.1 5.6
 12:1 1641.7 8.9 2883.7 11.5 1818.6 8.9
 12:2 1692.0 0.4 3043.0 3.4 1939.6 5.3
 12:3 1670.4 -0.8 2992.7 -2.1 1883.7 0.3
 12:4 1758.1 0.1 3185.7 -1.7 1987.2 1.9
 13:1 1589.2 -3.2 2843.1 -1.4  1790.7 -1.5
 13:2 1716.6 1.5 3072.8 1.0 1945.4 0.3
 

The retail picture was mixed among the East Tennessee metro areas during the second quarter. Dollar sales were higher in all three areas, rising 1.5% in the Tri-Cities to $1,717 million, 1.0% in Knoxville to $3,073 million, and 0.3% in Chattanooga to $1,945 million. Adjusted for inflation, sales volume increased 0.1% in the Tri-Cities, while declining 0.4% in Knoxville and 1.1% in Chattanooga. Retail volume has been falling in East Tennessee since the summer of 2012.

UNITED STATES AND TENNESSEE

 
 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 4,443,807 3.4 85,997 3.7
 2008 4,402,508 -0.9 83,612 -2.8
 2009 4,082,092 -7.3 77,155 -7.7
 2010 4,307,947 5.5 79,284 2.8
 2011 4,631,122 7.5 84,030  6.0
 2012 4,881,385 5.4 87,711 4.4
 09:1 941,740 -11.3 18,241 -9.0
 09:2 1,026,312 -10.6 19,439 -10.4
 09:3 1,030,668 -8.0 19,155 -8.5
 09:4 1,083,372 1.0 20,320 -3.0
 10:1 991,137 5.3 18,168 -0.4
 10:2 1,086,431 5.9 20,115 3.5
 10:3 1,076,186 4.4 19,907 3.9
  10:4 1,154,193 6.5 21,093 3.8
 11:1 1,066,683 7.6 19,141 5.4
 11:2 1,169,633 7.7 21,210 5.4
 11:3 1,162,358 8.0 21,202 6.5
 11:4  1,232,448 6.8 22,477 6.6
 12:1 1,152,703 8.1 20,829 8.8
 12:2 1,226,070 4.8 22,189 4.6
 12:3 1,213,092 4.4 21,628 2.0
 12:4 1,289,520 4.6 23,065 2.6
 13:1 1,188,117 3.1 21,014 0.9
 13:2 1,280,643 4.5 22,907 3.2
 

After a slow first quarter, national retail growth resumed during the spring months. Dollar sales in the United States increased for the fifteenth quarter in a row – rising 4.5% to $1,281 billion. Inflation adjusted sales were higher by 3.0%, marking the fourteenth consecutive quarter of real growth. (U.S. retail activity declined for seven quarters during the 2008 to 2009 recession, after increasing twenty consecutive quarters during the 2002 to 2007 business expansion.)

In Tennessee, dollar sales increased 3.2% to $22.9 billion. Adjusted for inflation, sales activity in the state was 1.8% above 2012 levels – a welcome reversal to the first quarter decline in sales volume. The state retail recovery has seen eleven consecutive quarters of real growth, one down quarter, and now one up quarter. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

The retail picture described in this report is a significant improvement over the generally weak performance of the first quarter. All of the retail markets covered here saw either higher growth or smaller declines.

Retail activity at the national level slowed in the winter months, but recovered in the second quarter. At present, retail sales in the United States have returned to the growth rates of 2012. Tennessee saw a burst in retail sales during the second quarter which was the best in four quarters and a strong reversal of the decline in the first quarter.

The three metro areas of East Tennessee did not participate in the state-wide recovery in retail sales, but conditions were improved over the winter period. The Tri-Cities metro area had the best performance in East Tennessee with a very modest improvement in real sales. Knoxville and Chattanooga saw sales decline again but at a reduced rate.

In the Tri-Cities area of Northeast Tennessee and Southwest Virginia, two cities (out of three) and four counties (out of seven) reported higher real sales in the April to June period. In the first quarter all these cities and counties had suffered lower sales volume. This is a significant improvement in the local retail picture.

Retail activity has been one of the bright spots in the overall recovery from the Great Recession. Thus any weakness or pause in retail growth has significant implications for the broader economy (which is still suffering from slow growth and high unemployment). The improved second quarter performance is welcome but the first quarter slowdown suggests that the momentum of the retail recovery may be weakening.

Technical Note. This report was prepared in September 2013. The “Retail Sales” figures used in this report are “Retail and Food Service Sales” which is the total 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 2007 U.S. Census of Retail Trade and 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. The dollar figures in the retail sales tables are in millions of dollars.

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, 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.