O.C. Taxable Sales Decline for 2nd Quarter in a Row

The recession took an even deeper cut into Orange County’s taxable sales at a time--last year’s holiday shopping season--when retailers could least afford it, according to state figures released Wednesday.

Despite the county’s diverse economy and its image of suburban affluence, the recession resulted in a second straight quarterly decrease in taxable sales, the State Board of Equalization reported.

The county’s total value of taxable sales was $7.26 billion during the fourth quarter of 1990, which was a 2.5% decline from the same period of 1989. The decrease followed a 0.4% decrease in the third quarter, which marked the county’s first quarterly sales tax decline in eight years.

But increases in taxable sales during the first half of 1990 helped boost the county into the plus column for the year. Taxable sales were up a meager 1.3% for all of 1990. It was the lowest annual increase since its growth of 0.4% in 1982; by contrast, the county had a 7.9% increase in 1989.

The 1990 fourth quarter will be remembered not only for the ravages of recession, but as the prelude to war against Iraq. As shoppers were cutting back on personal spending, county-based Marines and other military personnel were shipping out for the Persian Gulf.

“A lot of those guys had second incomes,” said Donald B. Murray, partner-in-charge of Audit Operations for the Deloitte & Touche accounting firm in Irvine. “It took a lot of spendable dollars out of the area.”

Retailers, many of whom depend on the Christmas season for half or more of their annual sales, complained that shoppers were staying away in droves. Those who did show up were browsers or bargain hunters. Business picked up in the days before Christmas, but price-cutting winnowed away profit margins.

Phil Vincent, an economist for First Interstate Bank in Los Angeles, said the figures show once again that despite its bulletproof image, Orange County is as vulnerable to recession as the rest of the nation. He said taxable sales were among several indicators in the county that have been pointing toward recession since last year. The employment rate has also been dropping, for example.

Orange County was among 13 of California’s 58 counties that had declines in fourth-quarter taxable sales. Among the others were San Diego, -3.2%; San Bernardino, -1.9%, and Ventura, -1.4%. Los Angeles County showed a 0.5% fourth-quarter increase; the state had a 1.1% overall increase.

Pat Murphy, a retail analyst for the accounting firm of Ernst & Young in Costa Mesa, said she expects that Orange County taxable sales will also show declines in the 1991 first quarter but will rebound in the second quarter.

Shoppers in the stores in January were so few, she said, that “you could fire a cannon and not hit anybody.”

Clerks now report more customers and more sales, she said.

O.C. Taxable Sales Uncertainty about the impending Gulf War pushed taxable sales down 2.5% in the fourth quarter of 1990, continuing the previous quarter’s downward trend. Fourth quarter figures, in billions of dollars: ‘83: 4.51 ‘84: 5.04 ‘85: 5.39 ‘86: 5.70 ‘87: 6.36 ‘88: 6.99 ‘89: 7.44 ‘90: 7.26 Source: State Board of Equalization