Consumer Spending - November 2008
In October, U.S. total retail sales experienced the largest month-over-month decline since 1985, and year-over-year growth slowed to its lowest level since 1991. Sales tax revenue in October (reflecting activity in September) remained below year-earlier levels across much of the District.
According to our informal survey of District retailers, October sales were disappointing. An increasing number of contacts reported that inventories were too high. The majority of retailers anticipate sales over the next three months to be down on a year-over-year basis. Contacts said that the early holiday shopping season appeared to exceed expectations, but retailers believe that overall sales would not continue at this pace for the rest of the holiday season.
Vehicle sales in the Southeast weakened further in September and October. For September, District new vehicle registrations dipped 23.2 percent from a year earlier while national registrations were down 19.7 percent. The decrease in District registrations was mostly due to declining truck and SUV sales in Florida and Georgia, the region's top vehicle markets. Districtwide, contacts from leading import distributors reported double-digit declines in sales for October across all models except subcompact vehicles. Sales of District-assembled vehicles through October were down 20 percent from a year earlier while total vehicle sales nationally declined 14.3 percent.
Tourism activity deteriorated in October. Contacts reported that visitor numbers at District tourist destinations weakened, and visitors spent less per trip. Several cruise lines and resorts aggressively discounted prices in an effort to boost traffic. Advance bookings have slowed as more people seem to be waiting for last-minute deals. Business travel was also down according to contacts in the convention industry. Credit issues affected the tourism industry, and some contacts reported projects being put on hold. On the bright side, lower gas prices benefited drive-to destinations in the region. Alabama gained from "staycationers," as did some destinations in Tennessee.