State’s Taxable Sales Jump 9% in 1st Quarter, Highest in 7 Years
In the latest sign of California’s strengthening economy, new figures show that state taxable sales surged 9% in the first quarter, the highest growth rate since 1989.
The state Board of Equalization, which compiles the data, said taxable transactions totaled $73.6 billion in January through March, up $6.1 billion from the same period in 1995. Officials said part of the big increase was due to the severe weather that lowered sales early last year.
Still, analysts said the latest sales figures, which are preliminary, are consistent with other economic indicators that point to a robust economy. In fact, taxable sales statewide had been lagging big gains in employment and personal income.
“It’s indicative of the strong economic recovery we’re enjoying this year,” said Ted Gibson, economist with the California Department of Finance.
Economists said the sales growth in the first quarter was even more remarkable given the extremely low inflation rate. In real dollars, state officials noted, taxable sales statewide grew 7.4% in the first quarter, which is the highest for any quarter since 1984.
“That’s strong, that’s strong,” said Jeff Reynolds, head statistician at the Board of Equalization in Sacramento. “I don’t think anyone in economic circles expected this.”
Reynolds said it was unlikely that taxable sales would continue to grow at the rate seen in the first quarter. Second-quarter sales won’t be reported for several weeks, but some economists estimated that sales were up 7% from the second quarter last year.
Reynolds added, “With inflation as low as it is, if we could have 5% growth we’d be quite content.”
A breakdown of first-quarter sales by counties showed wide variance, with Northern California areas generally faring better. In Los Angeles County, which has been trailing the state in employment, taxable transactions were up 4.7% in the first quarter, and sales in Orange County kept pace with the statewide growth rate.
By comparison, first-quarter sales surged 20% in Santa Clara County and 14% in Alameda County.
Consumer purchases at retail stores account for the bulk of all transactions that are subject to sales and use taxes. In the first quarter, most types of businesses benefited from the increased spending.
Leading the way were retailers that sell office and school supplies, which rang up 25% more sales in the first quarter. Sales at new-car dealerships--which account for about 10% of taxable transactions--surged 14% in the first quarter. Sales of men’s apparel, farm and garden supplies, and plumbing and electrical equipment also posted double-digit percentage increases.
The only major business category that saw a significant decline was household appliance dealers, whose sales fell 4%.
