ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + First Quarter 2016 + College of Business and Technology

CHANGES IN RETAIL SALES DATA

The state, regional, and local retail sales estimates in this report are now benchmarked to the new 2012 U.S. Census of Retail Trade. Please refer to the special note at the end of the report.

THE TRI-CITIES

The momentum of the record-setting holiday sales season continued into the new year. In the first quarter, dollar sales increased 19.5% in Bristol to $301 million, while Johnson City sales were up 7.6% to $516 million, and Kingsport sales rose 2.8% to $384 million. Thanks to new retailing centers, Bristol has enjoyed double-digit sales growth for the past four quarters. Lower energy prices continued to keep the overall inflation rate low compared to 2015. Thus the sales volume increases were 18.3% in Bristol, 6.4% in Johnson City, and 1.7% in Kingsport. In comparison, retail activity rose 4.3% in the metro area, 7.9% in Tennessee, and 2.7% in the nation.

 
   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 1071.7 -4.2 1860.4 0.3 1441.9 2.4
 2009 985.0 -8.1 1792.7 -3.6 1341.3 -7.0
 2010 976.4 -0.9 1846.2 3.0 1366.0 1.8
  2011 1019.6 4.4 1968.0 6.6 1435.6 5.1
 2012 1094.3 7.3 2000.8 1.7 1467.7 2.2
 2013 1008.0 -7.9 2006.3 0.3 1498.1 2.1
 2014 1046.0 3.8 2058.3 2.6 1562.9 4.3
 2015 1178.8 12.7 2150.0 4.5 1647.0 5.4
 12:1 261.4 13.9 475.1 7.3 348.7 8.2
 12:2 265.7 6.6 485.5 2.0 362.6 0.8
 12:3 267.2 1.9 486.1 -1.2 355.3 -2.4
 12:4 299.9 7.6 554.2 -0.6 401.1 2.9
 13:1 244.4 -6.5 474.1 -0.2 347.1 -0.5
 13:2 250.3 -5.8 495.2 2.0 369.1 1.8
 13:3 252.2 -5.6 480.9 -1.1 380.5 7.1
 13:4 261.1 -12.9 556.1 0.4 401.3 0.1
 14:1 241.2 -1.3 469.7 -0.9 357.5 3.0
 14:2 253.4 1.3  500.4 1.1 382.6 3.7
 14:3 270.6 7.3 505.6 5.1 391.7 2.9
 14:4 280.8 7.5 582.6 4.8 431.1 7.4
 15:1 251.8 4.4 479.3 2.1 373.2 4.4
  15:2 292.0 15.2 531.3 6.2 406.6 6.3
 15:3 299.8 10.8 526.5 4.1 415.3 6.0
 15:4 335.2 19.4 612.9 5.2 451.9 4.8
 16:1 301.0 19.5 515.6 7.6 383.6 2.8
 

THE METROPOLITAN AREAS

During the January to March quarter, dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 5.4% to $1,812 million. Reflecting the low rate of inflation, real metro sales were up 4.3%. As the table shows, there has been strong retail growth during the past seven quarters. Among the seven metro counties, dollar sales and sales volume were up in Unicoi, Sullivan, Carter, Washington (TN), and Washington (VA) Counties. Retail activity was lower in Hawkins 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 6620.3 -0.4 11694.8 -4.7 7112.5 -2.5
 2009 6305.3 -4.8 10975.2 -6.2 6655.5 -6.4
 2010 6582.6 4.4 11609.0 5.8 7102.1 6.7
 2011 6977.2 6.0 12938.5 11.5  7568.7 6.6
 2012 7091.1 1.6 13236.6 2.3 7810.4 3.2
 2013 7059.3 -0.4 13281.4 0.3 7785.9 -0.3
 2014 7279.7 3.1 13762.1 3.6 8060.9 3.5
 2015 7649.4 5.1 14701.8 6.8 8612.0 6.8
 12:1 1721.5 9.2 3153.7 12.5 1862.0 8.5
 12:2 1774.1 0.2 3327.9 3.8 1986.0 4.7
 12:3 1751.5 -1.3 3272.0 -2.4 1928.2 -0.5
 12:4 1844.0 -0.6 3483.0 -2.6 2034.2 0.9
 13:1 1666.4 -3.2 3108.4 -1.4 1833.0 -1.6
 13:2 1799.7 1.4 3359.6 1.0 1991.4 0.3
 13:3 1747.1 -0.3 3301.3 0.9 1924.8 -0.2
 13:4 1846.1 0.1 3512.1 0.8 2036.7 0.1
 14:1 1675.8 0.6 3126.6 0.6 1835.6 0.1
 14:2 1826.9 1.5 3445.8 2.6 2042.2 2.6
 14:3 1835.0 5.0 3471.8 5.2 2015.8 4.7
 14:4 1941.9 5.2 3717.9 5.9 2167.3 6.4
 15:1 1719.7 2.6 3294.4 5.4 1944.4 5.9
 15:2 1952.5 6.9 3697.6 7.3  2184.6 7.0
 15:3 1945.0 6.0 3750.3 8.0 2197.9 9.0
 15:4 2032.3 4.7 3958.4 6.5 2285.2 5.4
 16:1 1812.2 5.4 3531.7 7.2 2102.9 8.2
 

Retail activity remained strong in the three East Tennessee metro areas during the winter months. Dollar sales rose 8.2% in Chattanooga, 7.2% in Knoxville, and 5.4% in the Tri-Cities. Adjusted for inflation, real volume increased 7.0% in Chattanooga, 6.1% in Knoxville, and 4.3% in the Tri-Cities. This marks the eighth quarter of real sales growth in East Tennessee.

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 4,391,778 -1.1 85,558 -0.5
 2009 4,064,965 -7.4 82,254 -3.9
 2010 4,285,782 5.4 87,910 6.9
 2011  4,597,569 7.3 96,750 10.1
 2012 4,826,390 5.0 101,534 4.9
 2013 5,001,242 3.6 105,170 3.6
 2014 5,211,542 4.2 110,564 5.1
 2015 5,330,044 2.3 117,816 6.6
 12:1 1,141,856 7.7 24,115 11.0
 12:2 1,212,679 4.4 25,689 5.8
 12:3 1,199,528 3.9 25,033 2.2
 12:4 1,272,327 4.1 26,697 1.8
 13:1 1,171,113 2.6 24,489 1.6
 13:2 1,260,067 3.9 26,695 3.9
 13:3 1,253,506 4.5 26,058 4.1
 13:4 1,316,556 3.5 27,928 4.6
 14:1 1,196,520 2.2 25,373 3.6
 14:2 1,323,389 5.0 27,557 3.2
 14:3 1,314,789 4.9 27,735 6.4
 14:4 1,376,844 4.6  29,899 7.1
 15:1 1,228,297 2.7 26,173 3.2
 15:2 1,349,061 1.9 29,722 7.9
 15:3 1,344,967 2.3 29,810 7.5
 15:4 1,407,719 2.2 32,111 7.4
 16:1 1,274,575 3.8 28,553 9.1
 

At the national level, retail sales continued to increase at a moderate rate during the first quarter. Dollar sales in the United States rose 3.8% to $1,274 billion. With low inflation, sales volume was higher by 2.7%. Dollar sales in the country have now risen for twenty-six consecutive quarters. Adjusted for inflation, retail volume has now increased for twenty-five quarters in a row. (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 an impressive 9.1% to $28.5 billion. Adjusted for inflation, sales volume in the state was 7.9% above 2015 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in twenty-three of the last twenty-four quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

The first quarter of 2016 is a continuation of the recent quarters covered in this report. The holiday selling season was very good, and that momentum has continued into the new year. At the national level, the retail expansion now totals twenty-five consecutive quarters, easily beating the twenty quarters of growth achieved in the 2002-2007 business cycle. And U.S. retail growth is increasing again which is a good sign. As frequently noted, the strong retail recovery from the Great Recession has been one of the main engines of economic growth in the nation.

In the state and the region, retail sales growth is generally on a higher track than the nation as a whole. Dollar sales in Tennessee were up an impressive 9.1%, and the East Tennessee metro areas had growth ranging from 5.4% in the Tri Cities to 7.2% in Knoxville and 8.2% in Chattanooga. The state and the region have now achieved seven months of solid retail growth.

In the Tri-Cities, Bristol saw another quarter of double digit retail growth, thanks to new shopping centers in the Tennessee and Virginia parts of the Twin Cities. Retail activity in Johnson City and Kingsport also continued to increase.

The outlook for the future continues to be positive, but still with some concerns. Retail growth is becoming stronger in the nation, but many analysts point to higher levels of household debt and fear this will constrain future consumer spending. The regional economy is plugged into the national business expansion, so any slowdown in the national economy would adversely impact regional business conditions as well.

RETAIL RECOVERY SCORECARD

As noted below, the sales estimates in this report have been revised to match the new 2012 U.S. Census of Retail Trade. The actual level of retail sales in 2012 was higher than previously estimated, so the level of dollar sales in this report has been increased to match the new 2012 retail benchmark. Using the revised data, the following table compares retail sales in the last twelve month period with the retail sales of 2007, the high point of the 2002-2007 business expansion. The dollar sales are in millions, and the percent changes are shown for the dollar sales and for inflation-adjusted sales volume.

Twelve Month Dollar Sales Percent Change

 Market Area Jan07–Dec07 Apr15–Mar16 Dollar Volume
 Bristol TN-VA 1,119 1,228 +8.87 -4.40
 Johnson City  1,855 2,186 +15.13 -2.82
 Kingsport 1,408 1,657 +15.06 +2.69
 Tri-Cities CSA 6,643 7,742 +14.19 +1.70
 Knoxville MSA 12,266 14,939 +17.89 +5.93
 Chattanooga MSA 7,293 8,770 +16.84 +4.74
 Tennessee 85,997 120,197 +28.45 +18.03
 United States 4,439,733 5,376,322 +17.42 +5.40
 

Both the state and the nation show solid retail growth. U.S. dollar sales increased by 17.4% from $4.44 trillion to $5.38 trillion. Adjusted for inflation, sales volume was higher by 5.4%. Tennessee saw retail dollar sales increase 28.4% from $86.0 billion to $120.2 billion. In real terms, state sales were up 18.0% over the eight year period since the pre-recession high point.

The three East Tennessee metro areas all show retail gains. Knoxville sales volume is 5.9% above the 2007 level, while Chattanooga shows an increase of 4.7%, and the Tri-Cities has a 1.7% gain. Among the three cities, only Kingsport is back to pre-recession levels. Adjusted for inflation, Model City retail activity is 2.7% above the 2007 highpoint. In contrast Johnson City retail volume is down 2.8%, and Bristol retail volume is down 4.4%. These regional and local figures suggest that there is still ample room for continued retail sales growth in the Tri-Cities.

Special Note. The state, regional, and local retail sales estimates in this report are now benchmarked to the new 2012 U.S. Census of Retail Trade, as well as the earlier 2007 and 2002 retail censuses. The retail census is conducted by the U.S. Census Bureau in years ending in a “2” or a “7” as part of the larger Economic Census. Thus, every five years, this report has to be converted to the new benchmark data. The 2012 benchmark figures are generally higher than the previously published sales estimates. As a result, the state, regional, and local sales shown in this report have been increased to match the 2012 benchmark. Since the retail sales figures are based on sales tax collections, the percent change profile in retail activity is not substantially changed.

U.S. Data Note. The U.S. Census Bureau has revised the national retail sales data back to 2008. These revisions occur each year, and tend to be small. For example, U.S. retail sales for 2015 have been increased from $5,320 billion to $5,330 billion.

Technical Note. This report was prepared in June 2016. 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 2012 U.S. Census of Retail Trade, 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 (Ret), and Research Associate (Ret), BBER. Dr. Hipple will continue to prepare the retail sales reports on an interim basis. 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.