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ETSU report: Retail, employment data show regional economy in a slump

March 12th, 2014 9:53 pm by Hank Hayes

ETSU report: Retail, employment data show regional economy in a slump

The Tri-Cities' retail performance during 2013's critical holiday selling season was "very weak," according to a report released Wednesday by the East Tennessee State University Bureau of Business and Economic Research.

The ETSU report noted dollar sales increased only 0.4 percent in Johnson City, to $531 million, were unchanged in Kingsport at $408 million, and plunged 12.9 percent in Bristol to $260 million. When adjusted for inflation, sales volume was down 0.9 percent in Johnson City, 1.2 percent in Kingsport and 14 percent in Bristol.

Full-year results for 2013 show dollar sales rose 2.1 percent to $1.5 billion in Kingsport, increased 0.3 percent to $1.9 billion in Johnson City, but declined 7.9 percent in Bristol to $1 billion.

For the fourth quarter, retail activity in the Tri-Cities Combined Statistical Area was mixed. Dollar sales rose slightly, by 0.1 percent, to $1.7 billion. The report also said inflation-adjusted retail sales have now decreased in the metro area during six of the last seven quarters.

"The annual data for 2013 show a down year for retail activity in East Tennessee after three good years," the ETSU report stressed. "...The national recovery in retail activity lost some momentum during the fall quarter. Dollar sales in the United States increased for the 17th quarter in a row — rising 4 percent to $1.3 trillion. Inflation-adjusted sales were higher by 2.7 percent, marking the 16th consecutive quarter of real growth."

In Tennessee, with the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in 14 of the last 15 quarters, according to the ETSU report.

"Retail performance in the fourth quarter is more critical to the overall success of the retail industry than other quarters in the year due to the holiday selling season," the report's analysis said. "For many types of retail stores, the holiday selling season can represent up to 40 percent of overall annual sales and their profit or loss for the year. The fourth quarter of 2012 was mixed, and the earlier trends in the year continued into the fall and winter months. ... Tennessee has been enjoying a state-level retail recovery — based on the strength of sales growth in Middle and West Tennessee, which has more than offset declining retail performance in East Tennessee. The state government lives off of sales tax collections, so the state-level retail growth has been a welcome financial relief to the pressures on the state budget."

But the Tri-Cities retail sector, the report added, has been in a slump for seven quarters.

"These negative retail trends have been driven by the parallel decline in employment levels and its effect on local consumer confidence," the report concluded. "The business outlook has become more uncertain with the mixed performance of the fourth quarter. Retail and employment data show the Tri-Cities regional economy in a slump. Production, income, employment, and retail data show the U.S.. ... stuck on a sluggish growth path out of the Great Recession. This has been the story of the past two years, and is likely to continue to be the story in the immediate future." 

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