Survey Paints Gloomy S.D. Retail Sales Picture : Economy: U.S. Department of Commerce study contradicts more upbeat local reports.
Reflecting the severe impact of the Persian Gulf War and the nationwide recession on the local economy, retail sales in the metropolitan San Diego area were down 2% last year from 1989, according to a U.S. Department of Commerce survey.
The survey by the department’s U.S. Bureau of the Census paints a much gloomier picture of the local economy’s performance last year than estimates prepared by San Diego State University and by the Greater San Diego Chamber of Commerce Economic Research Bureau. The federal agency collected sales data in December from a broad range of local retailers, from gas stations to supermarkets.
Both SDSU and the Chamber of Commerce estimated there was a small increase last year in countywide retail sales in absolute dollar terms and expressed some skepticism about the Census Bureau’s survey. Retail sales are considered an important indicator of economic health and consumer confidence.
But the 2% drop in retail sales as reported by the Census Bureau seems bolstered by anecdotal data from local merchants and by various statistics. Examples include the fact that the number of San Diegans working retail jobs declined in 1990, that auto sales have slumped badly, and that shopping mall operators say countywide sales last year were off 2% to 3% from 1989.
Both the SDSU and Chamber of Commerce estimates of San Diego’s 1990 “gross regional product”--the total value of goods and services produced here--are essentially full-year projections based on six months’ worth of hard data. And the hard data represents activity that occurred before the Persian Gulf War erupted and began to inhibit consumers, as SDSU and chamber officials point out.
“It’s surprising and quite stark,” said San Diego State University economics professor Raford Boddy, speaking of the census study. Boddy and his colleagues recently completed a study that estimated San Diego retail sales last year grew 5% before adjusting for inflation, a projection that Boddy now concedes might have been “over-optimistic.”
According to the Census report, total 1990 taxable sales in the San Diego metropolitan area were $17.75 billion, down 2% from from $18.14 billion in 1989. The local decline in retail sales contrasts with a statewide increase of 4.5% in taxable sales and a nationwide increase of 3.6% in 1990.
Clearly, San Diego merchants have been hit hard by the Persian Gulf War. About 30,000 Navy personnel and 30,000 Marines based in San Diego County and Camp Pendleton were sent to the Middle East conflict and, therefore, were not in malls, auto showrooms and liquor stores spending money.
Although most of the Marines have returned, nearly all Navy personnel are still overseas, a Navy spokesman said Monday.
The war also hurt the local economy by shaking the consumer confidence of civilians who worried that a protracted Mideast war could harm the economy.
John Hine Jr., president of Hine Pontiac Mazda, said the war was a prime factor in sales at his dealerships being about flat in 1990 and being down 10% so far this year. His business has also been hurt by higher unemployment. The San Diego jobless rate in February reached 6.3% of the work force, highest since 1984.
“We are anticipating sales will pick up, and we have seen them pick up. But there has been no boom in the showrooms,” Hine said, despite evidence that his dealership has seen more military families “come by now that the war is officially over.” Hine added that dealership sales were off 25% in January and February, at the height of the conflict, before rebounding somewhat in March after allied forces emerged victorious.
Robert Sorensen, vice president of property management at Hahn Co., the San Diego-based owner of 52 shopping malls, including four in San Diego County, said mall sales overall in the county were down 2% to 3% last year.
Landlords such as Hahn are accommodating tenants by offering more attractive lease terms, including free rent and cash allowances. The improved terms are partly in recognition of the consolidation that has swept the retail industry, resulting in fewer tenants for Hahn and other mall owners to lease space to.
Jack Nowell, labor market analyst with the state Employment Development Department, said retail sector jobs in the county have shown a decline over the last three reporting months. Slightly more than 190,000 San Diegans were working in retail jobs as of February, for example, down from 191,300 in February 1990.
SDSU’s Boddy said he is not as sanguine as other economists in that he does not believe that an economic recovery is imminent. Although some pundits say the recovery should start within the next month or two, Boddy believes the economy will have to wait until 1991’s final quarter.
