Consumer Spending - July 2008
State tax revenue reports indicate that taxable retail revenue in June (reflecting retail sales in May) remained sluggish overall. Sales activity was below year-earlier levels across much of the District, and revenue sales growth softened from earlier in the year. Weakness was most pronounced in Georgia.
According to our informal survey of District retailers, June sales continued to disappoint. Most contacts reported that sales continued to decline compared with a year earlier. Merchants noted that sales did not meet expectations; however, the majority reported that inventories were even with a year earlier and in line with plans. Overall, retailers anticipate 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 May and June. For May, District new vehicle registrations dipped 15.5 percent while national registrations were down 13 percent. District registrations were mostly affected by falling truck and SUV registrations. For June, contacts from leading import distributors reported strong consumer demand for fuel-efficient cars.
Sales of District-assembled vehicles through June were down 17 percent from 2007 levels, compared to a decline of 10 percent nationally. Of 25 vehicle models assembled in the District, only Mercedes’ M-class SUVs and Nissan’s Altima sedans posted improved sales this year. Weak demand for full-sized trucks and SUVs has reportedly prompted Nissan and Honda to lower production of trucks and SUVs and increase output of smaller cars.
Tourism in the District remained mixed in June. Campaigns aggressively marketed Florida destinations to international visitors, but contacts in the Florida tourism industry reported a slowdown in bookings for the remainder of the year. Several contacts commented that spending was down and visits were shorter.
Domestic tourists were encouraged to drive to nearby destinations, and incentive schemes were notable. In Chattanooga, Tenn., attendance at three major tourist attractions—Rock City, Ruby Falls, and the Incline Railway—were reportedly down 8–10 percent this summer. In Nashville, on the other hand, attendance at the CMA Music festival was up 9.4 percent from last year. The festival generated $22 million in visitor spending, a 5 percent increase from last year.
Tourism in New Orleans was strong. The Audubon Insectarium opened in June and drew 50,000 visitors in the first month, beating official projections. Attendance through mid-July was at 20,000. Passenger arrivals at the Louis Armstrong New Orleans International Airport increased 15 percent in May 2008 compared to a year earlier.
In Mississippi, gaming revenues were $116.6 million in June, up 8 percent on a year-over-year basis.