Arizonans are continuing to shop — at least for the time being.
New figures from the state Department of Revenue show retail sales in January of $3.71 billion. That is a nearly 5.4 percent increase over the same month a year earlier — and more than 16 percent higher than two years ago.
“This a nice solid month performance in retail,” said Dennis Hoffman, an economics professor at the W.P. Carey School of Business at Arizona State University. And it follows what was a fairly lackluster December where year-over-year sales increased by just 3.7 percent.
Hoffman said January appears to have been a particularly good month for the sale of cars and trucks, with a double-digit increase. But he said a better indication of economic health is that the sale of durable goods, things like home furnishings, where year-over-year sales are up by more than 20 percent.
Hoffman said that Arizonans should not look for similar large annual increases in the coming months.
He said there were signs of a thaw in the economy last spring, with some boost in purchases at that time. Hoffman said it will be hard to maintain double-digit increases over those levels.
But he said something more than statistical issues may result in less-than-spectacular sales increases over the next few months.
“The headwind right now is $4 gas,” he said. The more that consumers have to spend filling up their vehicles, the less they have for other items.
Hoffman said the wholesale price of gasoline is now in the $3.50-a-gallon range. He said that is being pumped up largely by speculators, with no indication of increased demand.
And he said it could get worse if there is some development in Iran that would slow the flow of Middle East oil.
But even in that situation, Hoffman said one sector of the economy may still do well.
“People are probably still going to be buying cars because you probably want to get rid of that old fuel-inefficient junker,” he said. And he said that certain major purchases also are likely to remain unaffected.
“If you need a new washing machine or refrigerator, or want to fix up the house, typically gas prices are not going to deter you from doing that,” Hoffman said. “But the real thing to watch going forward is whether the price at the pump will put a damper on some of that budding consumer enthusiasm we’re seeing here.”