ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + First Quarter 2015 + College of Business and Technology

THE TRI-CITIES

Retail activity increased in all three cities in the first quarter despite severe weather conditions. Compared to 2014, Bristol sales were higher by 4.4% to $250 million, Kingsport sales rose 4.4% to $379 million, and Johnson City sales were up 2.0% to $457 million. Due to lower energy prices, the overall price level was unchanged on a year-to-year basis. With no inflation, sales volume increases were also 4.4% in Bristol, 4.4% in Kingsport, and 2.0% in Johnson City. In comparison, retail activity rose 2.7% in the metro area, 3.2% in Tennessee, and 2.3% 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
 2013 1002.3 -7.9 1915.5 0.3 1522.1 2.1
 2014 1040.1 3.8 1965.1 2.6 1587.9 4.3
 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
 13:3 250.8 -5.6 459.1 -1.1 386.6 7.1
  13:4 259.7 -12.9 531.0 0.4 407.7 0.0
 14:1 239.8 -1.3 448.4 -0.9 363.3 3.0
 14:2 252.0 1.3 477.8 1.1 388.7 3.7
 14:3 269.1 7.3 482.7 5.1 398.0 2.9
 14:4 279.2 7.5 556.2 4.8 438.0 7.4
 15:1 250.4 4.4 457.6 2.0 379.2 4.4
 

THE METROPOLITAN AREAS

During the January to March quarter, dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 2.7% to $1,641 million. With no price inflation, sales volume was up by the same amount. The impact of the bad winter weather was concentrated in the counties of Southwest Virginia, while the Tennessee counties saw retail growth similar to the fourth quarter. Dollar sales and real sales were higher in Sullivan, Washington (TN), Hawkins, and Carter counties, while declining in Unicoi, Washington (VA), and Scott counties.

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
 2013 6732.3 -0.4 12147.6 0.4 7606.1 -0.3
 2014 6942.9 3.1 12587.2 3.6 7874.8 3.5
 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
 13:3 1666.3 -0.3 3019.5 0.9 1880.3 -0.2
 13:4 1760.2 0.1 3212.3 0.8 1989.7 0.1
 14:1 1598.9 0.6 2859.7 0.6 1793.2 0.1
 14:2 1742.4 1.5 3151.6 2.6 1995.1 2.6
 14:3 1750.2 5.0 3175.4 5.2 1969.2 4.7
 14:4 1851.5 5.2 3400.5 5.9  2117.3 6.4
 15:1 1641.0 2.7 3013.2 5.4 1899.5 5.9
 

Retail performance continued to improve in all three East Tennessee metro areas during the January to March period. Dollar sales rose 5.9% in Chattanooga, followed by 5.4% in Knoxville, and 2.7% in the Tri-Cities. Adjusted for the zero rate of inflation, real sales increased 5.9% in Chattanooga, 5.4% in Knoxville, and 2.7% in the Tri-Cities. This marks the fourth quarter of real sales growth in East Tennessee. The lower sales gains in the Tri-Cities can be linked to the more severe weather in Northeast Tennessee and Southwest Virginia.

UNITED STATES AND TENNESSEE

 
 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 4,439,733 3.4 85,997 3.7
 2008 4,392,750 -1.1 83,612 -2.8
 2009 4,066,822 -7.4 77,155 -7.7
 2010 4,288,339 5.5  79,284 2.8
 2011 4,601,788 7.3 84,030 6.0
 2012 4,831,131 5.0 87,711 4.4
 2013 5,011,740 3.7 90,245 2.9
 2014 5,208,443 3.9 94,874  5.1
 11:1 1,061,098 7.5 19,141 5.4
 11:2 1,162,500 7.5 21,210 5.4
 11:3 1,155,125 7.8 21,202 6.5
 11:4 1,223,065 6.5 22,477 6.6
 12:1 1,142,659 7.7 20,829 8.8
 12:2 1,213,524 4.4 22,189 4.6
 12:3 1,200,672 3.9 21,628 2.0
 12:4 1,274,276 4.2 23,065 2.6
  13:1 1,174,124 2.8 21,014 0.9
 13:2 1,263,200 4.1 22,907 3.2
 13:3 1,256,485 4.7 22,360 3.4
 13:4 1,317,931 3.4 23,965 3.9
 14:1  1,196,532 1.9 21,772 3.6
 14:2 1,323,428 4.8 23,646 3.2
 14:3 1,314,034 4.6 23,799 6.4
 14:4 1,374,449 4.3 25,656 7.1
 15:1 1,224,153 2.3 22,458 3.2
 

The national retail expansion continued to roll along during the first quarter, despite the winter storms. Dollar sales in the United States rose 2.3% to $1,224 billion. This lower rate of increase in dollar sales can be misleading. With no inflation, real sales were also higher by 2.3% and this level of growth is in line with the volume gains of the preceding three quarters. Dollar sales in the country have now risen for twenty-two quarters in a row. Adjusted for inflation, retail volume has now increased for twenty-one consecutive quarters. (During the Great Recession period, U.S. retail activity declined for seven quarters, after increasing for twenty consecutive quarters during the 2002 to 2007 business expansion.)

In Tennessee, dollar sales rose 3.2% to $22.5 billion. Adjusted for zero inflation, sales activity in the state was also 3.2% above 2014 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in nineteen of the last twenty quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

Retail performance continued to be good in all of the markets covered in this report, despite concerns about the impact of the severe winter. At the national level, the retail expansion has now reached twenty-one quarters, surpassing the twenty quarters of growth achieved in the previous 2002-2007 business cycle. In the region and the state, retail merchants reported strong sales growth for the third quarter in a row. Bristol has been the sales leader in the metro area for the past three quarters, but most of the growth has been on the Tennessee side of State Street.

At the end of May, the government reported that real GDP declined at a 0.7% annual rate during the first quarter, stirring fears of a possible slowdown in the national economy. This decline however was based on seasonally adjusted production data. On a year-to-year basis, real GDP was higher by 2.7% - a rate of growth that matches the 2.0% increase in employment and the 2.3% higher retail sales volume. The national business expansion remains on track.

The strong retail growth in the regional economy matches the continued employment growth in the Tri-Cities (as measured by the Current Employment Survey). As discussed in the last labor market report, the CES payroll data provides the more accurate picture of employment conditions in the area. The more widely used Current Population Survey paints a false picture of declining employment, yet it is the source that is routinely used in labor market discussions.

The business outlook for the region and the nation remains positive. At the national level, production and employment and income and retailing continue to increase (especially as measured by the more accurate year-to-year comparisons). In the region, payroll employment and retailing have been improving. The ongoing national business recovery will continue to provide support for better business conditions in the Tri-Cities.

Technical Note. This report was prepared in June 2015. The “Retail Sales” figures used in this report are “Retail and Food Service Sales” which are 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.

Data Note. The U.S. Census Bureau has revised the national retail sales data back to 2003. These revisions occur each year and tend to be small. For example, U.S. retail sales for 2014 have been reduced from $5,271 billion to $5,208 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 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.