Retail Sales Down 7.4% in 1st Half of ’91 : Recession: The nationwide economic slump and the Gulf War are blamed for the decline, which affected a broad base of San Diego County merchants.

San Diego County retail sales slumped badly during the first six months of 1991, with area cash registers ringing up 7.4% fewer sales in dollar volume than over the same period last year. June sales were off 8% locally from June, 1990.

The nationwide recession and the Persian Gulf War were blamed for the slump, which, according to a U.S. Census Bureau survey, affected a broad cross-section of San Diego retailers, from department and specialty apparel stores to auto dealers and furniture shops.

Compounding the slump was inflation, which the bureau’s survey did not factor in. According to the U.S. Bureau of Labor Statistics, the consumer price index in San Diego rose 4.2% over the six-month survey period from the corresponding period in 1990. Thus, the county’s retail sales fell by more than 10% in inflation-adjusted dollars.

Retail sales are an important barometer of economic health because of the dollars that are pumped into the economy and because of the jobs retailing generates. Retail trade is the single largest employment category in the county, representing roughly a fifth of San Diego County’s total payroll, according to the state Employment Development Department.

The decline in retailing this year is not due to a particularly strong sales performance last year, said Kelly Cunningham, senior research analyst at the Greater San Diego Chamber of Commerce. In fact, retail sales in 1990 were down 5.3% from 1989, adjusting for inflation, Cunningham said, the first decline since 1982 and the steepest drop in 30 years.

“We had expected that things would be slow for first half and then pick up, but definitely the weakness has been weaker than we expected,” Cunningham said. “We expected it with the war and because the defense contractors--General Dynamics, Rohr and the rest--have had layoffs.”

Perhaps hardest hit among the retail sectors during 1991’s first half were vendors of “big ticket” items, or durable goods, including automobiles and large appliances.

John Hine Jr., president of the John Hine Pontiac Mazda dealership in Mission Valley, said unit sales at his dealership so far this year are running 10% below last year. Other dealers, particularly those selling luxury cars, have fared even worse, with sales dropping 15% to 25%, Hine said.

“We had a lot of things hit us this past year with the war, the recession, what’s going on in Russia, and most certainly the fears people have about our banking system,” Hine said. “Our industry really thrives on consumer confidence, and, although we think confidence is now rising, it was at a 10-year low this past six months.”

Owing perhaps to the local economy’s reliance on the military, San Diego County has been affected more by the recession and Persian Gulf War than have other cities in California and the nation. Retail sales statewide were off only 1.8% over the first six months of the year, and U.S. retail sales actually rose slightly over the first half of 1991, according to the Census Bureau study.

San Diego State University research analyst Joe Drew, a consultant to the university’s Center for Public Economics, said the survey may overstate the retail decline by giving too much weight to department store sales.

Nevertheless, an SDSU economic study scheduled to be released today shows a 5% decline in countywide retail sales in inflation-adjusted dollar volume over the first half of the year.

“Consumers have been holding back, paying down debt and readjusting their spending patterns to fit this recession,” Drew said. The decline in retail sales compares closely to 1982, Drew said, when retail activity fell 4.7% in inflation-adjusted dollars.

Mike Moser, a retailing specialist with CB Commercial real estate brokerage in San Diego, said the slump has been reflected in a slowdown in leasing by retail tenants, notwithstanding a few high-profile deals such as two leases signed by retailing giant Wal-Mart in Santee and Poway earlier this year.

“In terms of leasing activity, it’s been a little bit slower this year than last year, although it’s picked up over the last month,” Moser said.

Robert Sorensen, vice president of property management for Hahn Co., the San Diego-based owner and operator of 50 regional shopping malls nationwide, said: “It isn’t extremely positive. We are showing sales down from zero to 5% (at Hahn malls), depending on the region.”

In part because of the retail slump, the San Diego County employment base actually lost jobs this year for the first time in a decade, said SDSU’s Drew. “We lost 5,200 jobs in the first six months, down to 990,700 jobs as of June, 1991,” he said.

Whereas SDSU had earlier projected an addition of 10,000 jobs to the county work force this year, it now says the county will be lucky to hold its own in 1991.

“A 0% growth rate would be in contrast to a 5% job growth average from 1983 to 1989. . . . We fell off the end of the cliff this year,” Drew said.