Consumer Spending - August 2008
State tax revenue reports indicate that taxable retail sales in July (reflecting retail activity in June) remained sluggish overall. Revenue sales growth softened and was below year-earlier levels across much of the District. Weakness was most pronounced in Georgia while Alabama and Mississippi experienced an increase in revenue from a year earlier.
According to our informal survey of District retailers, July sales were disappointing as sales continued to decline while inventories were higher than a year earlier. Overall, retailers anticipate that sales over the next several months will be flat to slightly down on a year-over-year basis.
Vehicle sales in the Southeast weakened further in June and July. District new vehicle registrations dipped 18 percent while national registrations were down 12 percent on a three-month average basis ending in June. District registrations were mostly affected by declining truck and SUV sales. For July, contacts from leading import distributors reported sales declines across all models except subcompact vehicles.
Sales of District-assembled vehicles through July were down 16 percent from 2007 levels, compared to a decline of 10.5 percent nationally. All 25 vehicle models assembled in the District posted declines. Weak demand for full-sized trucks and SUVs has reportedly prompted several companies to cut production and hours to work off high inventories.
Tourism in the District was mostly positive in July, with south Florida gaining from increased flights to the Caribbean islands and the Bahamas. Some slowing is expected, however. For the Labor Day weekend, the Air Transport Association of America projected a 5.7 percent drop in travel overall compared to last year’s holiday weekend, with a 6.5 percent drop in domestic travel and a 1 percent increase in international travel.
In Atlanta, falling hotel occupancy rates remain a concern. Overall, occupancy rates dropped 4.4 percent in the second quarter, and occupancy rates at downtown hotels and the airport were more than 10 percent lower in June on a year-over-year basis, according to recent reports. On a more positive note, the Atlanta Convention and Visitors Bureau reported convention center hotel occupancy grew 1.7 percent in the second quarter.
Tourism in New Orleans remained strong. Tour operators and restaurants saw activity climb in spring and summer to record-breaking levels. Businesses reported achieving, and in some cases even surpassing, pre-Katrina activity levels. Passenger arrivals at the Louis Armstrong New Orleans International Airport increased 13 percent in June 2008 compared to a year earlier.
In Mississippi, gaming revenues were $115.7 million in July, down 7 percent on a year-over-year basis.