Ariz. economy gains thanks in part to auto sales - Ahwatukee Foothills News: News

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Ariz. economy gains thanks in part to auto sales

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Posted: Tuesday, July 24, 2012 9:47 am

Led by strong purchases of cars and trucks, Arizonans appear to be confident enough in the economy to post a small gain last month in retail sales over the same time a year earlier.

Figures from the state Department of Revenue put the sale of taxable retail items at $4.05 billion. On paper, that’s $100 million less than 2011.

But Elaine Smith, who heads the agency’s Office of Research and Analysis, said there was a one-time adjustment last June of sales into the retail category, specifically of furniture. The result, she said, inflated the June 2010 retail sales figures by about $280 million.

Factoring that out, it shows the state with a 4.5 percent year-over-year growth in sales.

“Overall, these collections figures show an economy that is growing at a modest pace,’’ said Marshall Vest, economist at the Eller School of Management at the University of Arizona.

But Vest noted the year-over-year pace of growth is still slower than the same time last year. Even factoring out the one-time blip, sales grew at more than 5 percent between June 2010 and 2011.

Economist Dennis Hoffman from the W.P. Carey School of Business at Arizona State University said the state is still showing “some moderate growth.’’

“It’s certainly not blockbuster growth,’’ he said.

“It’s not growth that would signal happy days are here again,’’ Hoffman continued. “But it’s a positive.’’

What’s significant, he said, is that there is much more hesitation by consumers at the national level to go out and spend money than there is here in Arizona.

Then there are those car and truck sales, which are up 20 percent from the same level a year earlier. But Hoffman said while that’s good, it isn’t necessarily a sign of recovery.

He pointed out that it was not unusual for motor vehicle sales in Arizona to top $700 million a month between 2004 and 2007. In fact, in one month in 2005 it sprinted far past $900 million.

By contrast, even with that 20 percent annual increase, sales last month fell short of $600 million.

Hoffman said part of what’s happening there is a variant of what happened in home sales: People stopped moving to Arizona from elsewhere.

“Folks would come here and they’d buy a house and they’d buy consumer vehicles and they’d tend to buy a car as well,’’ he said. That was a pattern on which the state had come to depend.

“As every year went by, we just did ‘wash, rinse, repeat,’” he quipped. “It turned out to be not sustainable.’’

Looking at other categories, Vest said sales of clothing and accessories were up 5.1 percent.

“Increases for the remaining large categories were disappointing,’’ he said.

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