WASHINGTON, D.C. – In early December, Cache County officials were pleasantly surprised to discover that local sales tax revenues had not been adversely affected by the coronavirus pandemic.
Recently released sales figures from the U.S. Census Bureau now indicate that retailers nationwide were similarly fortunate and suggest that this holiday season will likely generate positive economic news.
Census analysts report that total U.S. retail sales grew from $2.5 trillion in 1998 to $5.2 trillion in 2018. Online sales represented a significant portion of that growth, jumping from $5 billion to nearly $520 billion over that 20-year period.
That upward sales trend was expected to continue into 2020, until the worldwide coronavirus outbreak early in the year.
The supply chain disruptions, business closings and layoffs resulting from the pandemic caused economists to issue dire warnings of economic consequences starting in mid-March. But sales statistics from the Census Bureau now seem to indicate that those predictions were unnecessarily gloomy.
Prior to the pandemic, U.S. retailers reported seasonally adjusted sales and net income after taxes of more than $803 billion during the first quarter of 2020. That was up from $776 billion in the first quarter of 2019, an increase of 3.4 percent.
The economic impacts of the viral outbreak were already being felt in the months from April to June of 2020. But the Census reports that retail activity still topped $829 billion in the second quarter of this year, up nearly 5 percent from the same period in 2019.
Sales data from the third quarter of 2020 also confounded pessimists’ predictions. Between July and September, U.S. retail activity rose to more than $870 billion, up from $796 billion in third quarter of 2019, an increase of more than 9 percent.
Here in Cache Valley, County Executive Craig Buttars attributed the unexpected growth of local sales tax revenues during the ongoing pandemic to home-investment expenditures like backyard purchases and remodeling, plus increased online shopping early in the current holiday season.
Similar trends seem to be playing out on a national level, according to Census data.
Across the country, 2020 purchases are off at gasoline stations (down by 16.4 percent), clothing stores (down by 28.5 percent) and restaurants/drinking establishments (down by 19.4 percent).
But those slumping sales appear to be at least partially offset by increased consumer spending at home improvement stores (up by 13.4 percent), grocery/beverage stores (11.6 percent) and non-store/online retailers (up by 22.6 percent).
While Census data about 2020 fourth quarter retail sales will not begin to be available until mid-January, the National Retail Federation is now forecasting that consumer spending will increase by between 3.6 percent and 5.2 percent this holiday season.
If that NRF prediction is accurate, retail sales during the fourth quarter of 2020 could range from at least $836 billion to $848 billion.
That level of spending would undoubtedly result in a very Merry Christmas for a lot of people on both sides of retail sales counters.