Shoppers exit Target at the Kingsport Pavilion on Black Friday. Photo by David Grace.
Kingsport reported a large increase in retail sales during this year’s third quarter, while retail activity was down slightly in Johnson City and Bristol, according to a report released Friday by the East Tennessee State University Bureau of Business and Economic Research.
Retailing for the quarter jumped 7.1 percent to $387 million in Kingsport, but sales were down 1.1 percent in Johnson City to $459 million and 5.6 percent in Bristol to $251 million.
Overall retail activity declined in Tri-Cities Combined Statistical Area with sales falling slightly by 0.3 percent to $1.6 billion.
Inflation adjusted retail sales have now decreased in the region during five of the last six quarters, according to the ETSU report.
“The Tri-Cities area economy has been in a slump since early 2012,” the report’s analysis said. “Employment levels and retail purchases have been declining together. With falling job levels, families now have less money to spend at retail stores.
“These factors make for a mixed outlook for the critical holiday selling season in the fourth quarter. The conventional wisdom is that 40 percent of retail stores will make their annual profit or loss during November and December. To complicate matters, this holiday selling season is very short and has already been impacted by bad weather.”
In contrast, the national recovery in retail activity gained strength during the quarter. U.S. dollar sales increased for the 16th quarter in a row.
“Retail sales in the United States have been expanding for four years, and have been a bright spot in the otherwise weak business recovery from the Great Recession of 2008-09,” the report said. “The recent growth in national employment levels and the continued strength in consumer demand are now the main engines of overall economic growth.”
In Tennessee, dollar sales increased 3.4 percent to $22.4 billion. Adjusted for inflation, sales activity in the state was 1.8 percent above 2012 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in 13 of the last 14 quarters. Sales growth in Middle and West Tennessee have more than offset declining retail performance in East Tennessee.
“The state government lives off of retail sales tax collections, so the state-level retail growth has provided welcome financial relief to the state budget,” the report noted.
The report concluded two events should provide a late but welcome boost to consumer confidence and holiday spending. First, the continuing budget legislation passed by Congress has eliminated all risk of another government shutdown until 2015. So there will be no “budget cliff” or “debt ceiling cliff” until after the 2014 election cycle. Secondly, recent growth in employment and production has led the Federal Reserve to announce it is able to reduce its level of financial stimulation.