Arizonans continue to pick up the pace of their spending.
New figures Friday from the state Department of Revenue put total expenditures on taxable items in May at slightly more than $4 billion. That's an 11 percent boost from the same time a year earlier.
But the state still has a long way to go to get back to pre-recession levels.
In May 2007, Arizonans shelled out more than $4.8 billion for taxable items, the ones tracked by the Department of Revenue. And the current figure is no more than it was in 2005.
Economist Marshall Vest at the University of Arizona's Eller College of Management said he is "cautiously optimistic" about the figures.
He said this kind of year-over-year growth is a good sign the economy is recovering. But Vest said some elements in the report make him question the accuracy of the numbers.
For example, he noted that the report says sales at stores that sell furniture and home furnishings is up by more than 37 percent from the same time last year. Vest said he can think of no reason for such a large jump.
But Dennis Hoffman of the W.P. Carey School of Business, has a theory.
He said a lot of attention is being paid to the folks out of work and those who have lost their houses. But he said there also are a lot of people who are doing reasonably well and have equity in their homes.
These folks, he said, have taken advantage of low interest rates and refinanced their homes, reducing their monthly payments.
"You're probably freeing up $200, $300, $400 a month," Hoffman said. He said consumers say to themselves, "Hey, we need a car, the other one's wearing out and here's the way we're going to get it."
The same is true, he said, with furniture and other durable goods.
Hoffman acknowledged that some of the wild fluctuations in the numbers for individual types of businesses may simply be due to the way the Department of Revenue keeps its books.
He said these monthly reports list the figures that individual retailers provide each month. Hoffman said if several large merchants are late in filing, the sales then are booked in the following month, making that report look unusually large.
But Hoffman said that, overall, he believes that 11 percent annual boost in sales is more or less accurate.
"It's a sign that the slumbering Arizona consumer is awakening," he said. "He's not partying yet, obviously. But I like the trajectory."
Hoffman said that spending is occurring even though voters approved a temporary one-cent hike in state sales taxes.
Vest said the numbers are a positive sign the economy in Arizona is improving.
One item of note is that spending at bars and restaurants is up about 6.5 percent from the same time a year earlier. But Vest said that doesn't necessarily mean more people are eating out.
"The price of food has gone up and so they're raising their prices," he said, with higher energy costs one of the overall factors. "So part of that may be due to inflation rather than volume."
In fact, Vest said the indicators he sees suggest no big uptick in the number of people dining out.
"You read the paper and every week there's another restaurant that just went out of business or declared Chapter 11" bankruptcy, he said.
Vest said he is monitoring other statistics as signs of the state's economic health. But he said even these may not be as clear as it otherwise might seem.
He noted that individual income tax collections are up. While that can be a sign of people making more money, Vest said he sees other scenarios.
For example, it could be that speculators who bought homes and successfully "flipped" them are now having to report - and pay taxes on - their capital gains. That has nothing to do with employment.
Similarly, Vest said there is evidence that fewer people are filing itemized tax returns, likely because they no longer have a home and therefore no longer have mortgage interest expenses to deduct. That means having to take the standard deductions which will be smaller, meaning higher tax liability.
Hoffman goes a step farther, saying those home refinancings at lower rates also are reducing the mortgage interest burden and, by extension, the deduction that taxpayers can take. And Hoffman agreed that there are no indications either that more people are working or that those with jobs are getting big pay raises that would explain bigger income tax liability.