HomeMy WebLinkAbout2018 Sales Tax Digest Fourth Quarter
CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR
June 10, 2019
The Honorable City Council
Palo Alto, California
City of Palo Alto Sales Tax Digest Summary Fourth Quarter Sales
(October - December 2018)
We received $9.9 million for fourth quarter sales of 2018 which is $1.5 million (17.5 percent)
more than the same quarter of 2017. The following files are attached for this informational
report for which no action is required.
ATTACHMENTS:
• Attachment A: Avenu Sales Tax Digest Summary (PDF)
• Attachment B: Economic Categories and Segments (PDF)
• Attachment C: Avenu Economic News and Trends (PDF)
Department Head: Don Rhoads, Special Advisor to the Office of the City Auditor
Page 2
City of Palo Alto
Sales Tax Digest Summary
Collections through March 2019
Sales through December 2018 (2018Q4)
www.avenuinsights.com (800)800-8181 Page 1
California Overview
The percent change in cash receipts from the prior year was 5.3% statewide, 4.9% in Northern California
and 4.5% in Southern California. The period’s cash receipts include tax from business activity during the
period, payments for prior periods and other cash adjustments. When we adjust for non-period related
payments, we determine the overall business activity increased for the year ended 4th Quarter 2018 by
3.9% statewide, 3.2% in Southern California and 4.9% in Northern California.
City of Palo Alto
For the year ended 4th Quarter 2018, sales tax cash receipts for the City increased by 17.5% from the
prior year. On a quarterly basis, sales tax revenues increased by 11.6% from 4th Quarter 2017 to 4th
Quarter 2018. The period’s cash receipts include tax from business activity during the period, payments
for prior periods and other cash adjustments.
Excluding state and county pools and adjusting for anomalies (payments for prior periods) and late
payments, local sales tax increased by 12.0% for the year ended 4th Quarter 2018 from the prior year.
On a quarterly basis, sales tax activity increased by 7.9% in 4th Quarter 2018 compared to 4th Quarter
2017.
Regional Overview
This seven-region comparison includes estimated payments and excludes net pools and adjustments.
% of Total / % Change
City of Palo
Alto
California
Statewide
S.F. Bay
Area
Sacramento
Valley
Central
Valley South Coast Inland
Empire North Coast Central
Coast
General Retail 29.2 / 0.2 28.0 / 1.9 25.7 / 1.5 27.8 / 5.1 30.4 / 3.8 28.9 / 1.7 27.7 / 4.4 27.8 / -15.9 29.2 / 6.5
Food Products 16.9 / 1.1 20.6 / 2.4 21.5 / 1.8 17.0 / 3.9 16.0 / 2.1 22.3 / 2.6 17.0 / 5.0 21.8 / -33.6 30.6 / 6.5
Construction 1.3 / -33.3 9.9 / 10.4 9.9 / 11.3 12.0 / 11.9 11.6 / 12.8 8.8 / 8.4 11.3 / 12.8 13.9 / -16.1 8.5 / 39.1
Business to Business 26.4 / 23.0 16.2 / 3.1 19.2 / 3.4 13.8 / 0.9 15.5 / 8.5 15.4 / 3.3 15.5 / 1.2 7.8 / -41.3 8.6 / 6.1
Misc/Other 26.1 / 30.8 25.3 / 5.4 23.7 / 12.0 29.4 / 3.3 26.4 / 3.6 24.5 / 4.5 28.5 / 3.9 28.6 / -37.2 23.2 / 5.7
Total 100.0 / 12.0 100.0 / 3.9 100.0 / 5.2 100.0 / 4.5 100.0 / 5.1 100.0 / 3.4 100.0 / 4.7 100.0 / -29.3 100.0 / 8.4
City of Palo
Alto
California
Statewide
S.F. Bay
Area
Sacramento
Valley
Central
Valley South Coast Inland
Empire North Coast Central
Coast
Largest Segment ***Restaurants Restaurants Auto Sales -
New
Department
Stores Restaurants Restaurants Restaurants Restaurants
% of Total / % Change 20.2 / 44.4 14.8 / 2.0 15.5 / 2.3 11.9 / -0.7 12.2 / 1.9 16.6 / 2.1 11.3 / 3.3 12.1 / -31.7 21.9 / 5.9
2nd Largest Segment Restaurants Auto Sales -
New
Auto Sales -
New
Department
Stores Restaurants Auto Sales -
New
Auto Sales -
New
Service
Stations
Auto Sales -
New
% of Total / % Change 15.0 / 2.0 11.0 / 3.7 12.0 / 13.6 11.5 / 13.8 10.5 / 2.4 10.7 / 2.5 10.1 / -1.5 11.9 / -29.5 11.1 / 2.9
3rd Largest Segment Office
Equipment
Department
Stores
Miscellaneo
us Retail Restaurants Auto Sales -
New
Miscellaneo
us Retail
Department
Stores
Department
Stores
Miscellaneo
us Retail
% of Total / % Change 10.9 / 63.3 8.8 / 1.9 7.8 / 3.1 11.3 / 2.0 10.2 / -1.8 8.7 / 1.3 9.8 / 2.8 11.9 / 21.1 9.8 / 4.7
*** Not specified to maintain confidentiality of tax information
CITY OF PALO ALTO
BENCHMARK YEAR 2018Q4 COMPARED TO BENCHMARK YEAR 2017Q4
ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 4th Quarter 2018
ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 4th Quarter 2018
Attachment A
City of Palo Alto
www.avenuinsights.com (800)800-8181 Page 2
Gross Historical Sales Tax Performance by Benchmark Year and Quarter (Before Adjustments)
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
Quarterly Benchmark Year
Net Cash Receipts for Benchmark Year 4th Quarter 2018: $33,448,981
*Benchmark year (BMY) is the sum of the current and 3 previous quarters (2018Q4 BMY is sum of 2018 Q4, Q3, Q2, Q1)
Restaurants
12.6%
Leasing
7.4%
Department Stores
5.9%
Furniture/Appliance
5.8%
Food Markets
1.3%
Recreation Products
0.8%
All Other
50.1%
Net Pools & Adjustments
16.1%
Attachment A
City of Palo Alto
www.avenuinsights.com (800)800-8181 Page 3
TOP 25 SALES/USE TAX CONTRIBUTORS
The following list identifies Palo Alto’s Top 25 Sales/Use Tax contributors. The list is in alphabetical order
and represents the year ended 4th Quarter 2018. The Top 25 Sales/Use Tax contributors generate 54.2%
of Palo Alto’s total sales and use tax revenue.
Anderson Honda Integrated Archive Systems Stanford Outpatient Clinic Pharmacy
Apple Stores Luciele Salter Packard's Children's Hospital Tesla
Audi Palo Alto Macy's Department Store Tesla Lease Trust
Bloomingdale's Magnussen's Toyota Of Palo Alto Urban Outfitters
Bon Appetit Management Co.Neiman Marcus Department Store Usb Leasing
Fry's Electronics Nest Labs Valero Service Stations
Hewlett Packard Enterprise Company Nordstrom Department Store Varian Medical Systems
Houzz Shop Shell Service Stations Volvo Cars Palo Alto
Hp Enterprise Services
Sales Tax from Largest Non-Confidential Economic Segments
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
Benchmark Year 2018Q4 Benchmark Year 2017Q4
Attachment A
City of Palo Alto
www.avenuinsights.com (800)800-8181 Page 4
Historical Analysis by Calendar Quarter
Economic Category % 2018Q4 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4 2016Q3 2016Q2
General Retail 24.5% 2,428,644 1,937,139 1,965,691 1,851,152 2,635,136 1,860,347 1,952,490 1,684,023 2,784,731 1,983,231 2,141,794
Misc/Other 25.9% 2,567,368 2,195,807 1,629,266 1,516,808 1,881,732 1,602,213 1,301,138 1,392,756 1,621,044 1,727,134 1,617,307
Food Products 12.2% 1,213,676 1,187,765 1,237,941 1,183,895 1,206,578 1,184,645 1,189,257 1,192,662 1,235,801 1,213,382 1,194,369
Business To Business 18.9% 1,877,247 2,260,007 1,789,526 1,639,073 1,569,619 1,448,336 1,284,056 1,240,962 1,004,883 1,027,730 1,140,526
Net Pools & Adjustments 18.4% 1,820,850 2,139,510 1,191,568 -183,952 1,136,075 1,374,372 1,210,511 1,631,125 1,351,709 831,377 1,313,745
Total 100.0% 9,907,785 9,720,228 7,813,992 6,006,976 8,429,140 7,469,913 6,937,452 7,141,528 7,998,168 6,782,854 7,407,741
Economic Segments % 2018Q4 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4 2016Q3 2016Q2
Miscellaneous/Other 49.3% 4,881,849 4,854,095 3,747,045 3,373,907 3,791,527 3,233,434 2,986,873 2,910,133 2,939,228 3,027,081 2,973,047
Restaurants 10.8% 1,066,578 1,060,546 1,124,991 1,045,496 1,054,073 1,049,565 1,058,606 1,043,747 1,071,053 1,068,101 1,068,502
Miscellaneous Retail 4.1% 405,979 361,406 439,601 412,952 701,369 419,279 452,135 435,757 1,002,389 581,831 681,345
Department Stores 6.1% 599,795 475,142 495,267 471,419 642,666 458,066 510,561 392,565 641,541 491,433 546,629
Apparel Stores 6.0% 596,192 448,510 451,110 390,780 585,892 440,005 449,402 372,033 553,250 398,170 444,383
Service Stations 1.8% 173,916 148,751 154,446 163,072 148,906 147,499 159,371 119,552 130,396 138,155 144,735
Food Markets 1.1% 110,015 98,072 97,870 117,783 128,671 117,256 112,566 131,676 145,179 126,755 109,108
Business Services 1.8% 175,994 43,961 57,433 155,193 157,861 173,439 75,722 43,548 102,095 47,066 65,510
Recreation Products 0.8% 76,617 90,235 54,661 60,326 82,100 56,998 76,514 61,392 61,328 72,885 60,737
Net Pools & Adjustments 18.4% 1,820,850 2,139,510 1,191,568 -183,952 1,136,075 1,374,372 1,055,702 1,631,125 1,351,709 831,377 1,313,745
Total 100.0% 9,907,785 9,720,228 7,813,992 6,006,976 8,429,140 7,469,913 6,937,452 7,141,528 7,998,168 6,782,854 7,407,741
*Net Pools & Adjustments reconcile economic performance to periods’ net cash receipts. The historical amounts by calendar quarter: (1) include
any prior period adjustments and payments in the appropriate category/segment and (2) exclude businesses no longer active in the current
period.
Attachment A
City of Palo Alto
www.avenuinsights.com (800)800-8181 Page 5
Quarterly Analysis by Economic Category, Total and Segments: Change from 2017Q4 to 2018Q4
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Campbell -4.7% 7.4%0.5% 4.6% -0.5% 2,563,743 2,531,924 1.3%Restaurants Service Stations Furniture/Appliance Auto Parts/Repair
Cupertino -10.4% -0.3% -22.0% -17.7% -1.6% 7,973,053 9,465,438 -15.8%Bldg.Matls-Retail Restaurants Office Equipment Bldg.Matls-Whsle
Gilroy 0.2% 0.9% 7.1% -3.7% 3.2% 4,368,227 4,310,536 1.3%Department Stores Auto Sales - New Apparel Stores Heavy Industry
Los Altos -24.2% 1.9% -18.0% -13.6% 5.4% 639,728 682,975 -6.3%Restaurants Service Stations Miscellaneous Retail Office Equipment
Los Gatos -7.3% -1.1% -19.1% -23.7% 1.1% 1,660,368 1,731,494 -4.1%Service Stations Miscellaneous Other Business Services Miscellaneous Retail
Milpitas -2.3% -4.3% 24.5% -24.2% -7.1% 5,719,981 6,178,213 -7.4%Light Industry Bldg.Matls-Whsle Office Equipment Electronic Equipment
Morgan Hill 2.3% 3.6% 8.2% 203.1% -1.0% 2,664,455 2,094,814 27.2%Heavy Industry Service Stations Leasing Auto Parts/Repair
Mountain View 73.8% 8.8% -13.2% -10.2% 5.1% 5,723,228 4,609,135 24.2%Miscellaneous Retail Restaurants Business Services Office Equipment
Palo Alto -7.5% -0.8% -7.3% 11.4% 33.2% 8,086,935 7,498,166 7.9%Auto Sales - New Office Equipment Electronic Equipment Miscellaneous Retail
San Jose -0.4% -3.2% 3.6% -2.4% 17.4% 42,937,477 41,681,985 3.0%Auto Sales - New Office Equipment Light Industry Green Energy
Santa Clara 5.7% -7.1% -3.8% -3.7% -8.8% 11,823,664 12,315,342 -4.0%Business Services Department Stores Light Industry Auto Sales - New
County of Santa Clara 32.2% 2.5% 230.8% -2.1% -25.2% 1,203,105 1,059,670 13.5%Miscellaneous Retail Bldg.Matls-Whsle Health & Government Restaurants
Saratoga -17.6% -10.6% 24.7% 37.7% -10.1% 237,058 259,783 -8.7%Office Equipment Service Stations Restaurants Miscellaneous Retail
Sunnyvale -12.3% -2.8% -14.4% -23.9% 27.1% 6,917,934 7,430,764 -6.9%Auto Sales - New Light Industry I.T. Infrastructure Miscellaneous Retail
Attachment A
Economic Categories and Segments
Economic Category Economic Segment Description
Business to Business ‐ sales of
tangible personal property from
one business to another business
and the buyer is the end user.
Also includes use tax on certain
purchases and consumables.
Business Services Advertising, banking services,
copying, printing and mailing
services
Chemical Products Manufacturers and wholesalers
of drugs, chemicals, etc.
Electronic Equipment Manufacturers of televisions,
sound systems, sophisticated
electronics, etc.
Energy Sales Bulk fuel sales and fuel
distributors and refiners
Heavy Industry Heavy machinery and
equipment, including heavy
vehicles, and manufacturers and
wholesalers of textiles and
furniture and furnishings
Leasing Equipment leasing
Light Industry Includes, but is not limited to,
light machinery and automobile,
truck, and trailer rentals
Office Equipment Businesses that sell computers,
and office equipment and
furniture, and businesses that
process motion pictures and film
development
Construction Building Materials – Retail Building materials, hardware,
and paint and wallpaper stores
Building Materials ‐ Wholesale Includes, but is not limited to,
sheet metal, iron works, sand
and gravel, farm equipment,
plumbing materials, and
electrical wiring
Food Products Food Markets Supermarkets, grocery stores,
convenience stores, bakeries,
delicatessens, health food stores
Food Processing Equipment Processing and equipment used
in mass food production and
packaging
Liquor stores Stores that sell alcoholic
beverages
Restaurants Restaurants, including fast food
and those in hotels, and night
clubs
Attachment B
Economic Categories and Segments
Economic Category Economic Segment Description
General Retail – all consumer
focused sales, typically brick and
mortar stores
Apparel Stores Men’s, women’s, and family
clothing and shoe stores
Department Stores Department, general, and variety
stores
Drug Stores Stores where medicines and
miscellaneous articles are sold
Florist/Nursery Stores where flowers and plants
are sold
Furniture/Appliance Stores where new and used
furniture, appliances, and
electronic equipment are sold
Miscellaneous Retail Includes, but is not limited to,
stores that sell cigars, jewelry,
beauty supplies, cell phones, and
books; newsstands, photography
studios; personal service
businesses such as salons and
cleaners; and vending machines
Recreation Products Camera, music, and sporting
goods stores
Miscellaneous/Other Miscellaneous/Other Includes but not limited to
health services, government,
nonprofit organizations, non‐
store retailers, businesses with
less than $20,000 in annual gross
sales, auctioneer sales, and
mortuary services and sales
Transportation Auto Parts/Repair Auto parts stores, vehicle and
parts manufacturing facilities,
and vehicle repair shops
Auto Sales ‐ New New car dealerships
Auto Sales ‐ Used Used car dealerships
Miscellaneous Vehicle Sales Sale and manufacture of
airplanes and supplies, boats,
motorcycles, all‐terrain vehicles,
trailers and supplies
Service stations Gas stations, not including
airport jet fuel
Attachment B
ECONOMIC NEWS & TRENDS
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
2 www.avenuinsights.com
PART 1: NATIONAL ECONOMIC INDICATORS / INFLUENCES
Indicators and Influences
GDP: Grew 3.2% in 1Q2019 and was the best start to a
year since 2015. Was 2.2% in 4Q2018; 3.4% in 3Q2018;
and 4.2% in 2Q2018. The acceleration in growth
reflected an upturn in state and local government
spending, accelerations in private inventory investment
and in exports, and a smaller decrease in residential
investment. (https://www.bea.gov/news/2019/gross-
domestic-product-1st-quarter-2019-advance-estimate,
April 26, 2019)
Retail Sales for March 2019: Best Retail Sales Since 2017:
The value of overall sales in March rose 1.6%, boosted by
gains in motor vehicles and gasoline stations. Retail sales
in the U.S. jumped by the most since September 2017
and first-time filings for unemployment benefits dropped
to a 49-year low, as a strong labor market gives American
consumers the wherewithal to keep the economy
chugging along.
The CPI measures the change in prices paid by consumers
for goods and services. It is a measure of the average
change over time in the prices paid by urban consumers
for a market basket of consumer goods and services.
Indexes are available for the U.S. and various geographic
areas. CPI for All Urban Consumers: Increased 0.4% in
March 2019 after rising 0.2% in February. Energy:
Increased 3.5% in March. Gasoline and Electricity:
Increased sharply, and the electricity index also rose,
although the natural gas index declined. Food Including
Food at Home and Away: Increased in March.
Other Increases in March: Shelter, medical care, new
vehicles, recreation, education, and tobacco were among
those that increased in March. Declines for March:
Apparel, used cars and trucks, and airline fares. March
2018 Over March 2019: Over the last 12 months, the all
items index increased 1.9% before seasonal adjustment.
Conference Board Consumer Confidence Index for March
2019: Declined in March, after increasing in February.
The Index now stands at 124.1 (1985=100), down from
131.4 in February. Present Situation Index – consumers’
assessment of current business and labor market
conditions – declined, from 172.8 to 160.6. Expectations
Index – consumers’ short-term outlook for income,
business and labor market conditions – decreased from
103.8 in Feb to 99.8 in Mar. (https://www.conference-
board.org/data/ConsumerConfidence.cfm)
U.S. Tax Revenue Projection Between October 1, 2019
and September 30, 2020: The U.S. government's total
revenue is estimated to be $3.643 trillion for Fiscal
Year 2020. Income taxes contribute $1.822 trillion, over
half of the total. Another third, $1.295 trillion, comes
from payroll taxes. Corporate taxes add $256 billion, only
7%. The Tax Cut and Jobs Act cut taxes for corporations
much more than it did for individuals. The Federal
Reserve contributes $49 billion. Its revenue comes from
a variety of activities. Excise taxes and tariffs on imports
contribute $157 billion. The remaining $64 billion comes
from estate taxes and miscellaneous receipts.
(https://www.whitehouse.gov/wp-
content/uploads/2019/03/budget-fy2020.pdf)
Global Economy
World Economic Outlook: After strong growth in 2017
and early 2018, global economic activity slowed notably
in the second half of last year, reflecting a confluence of
factors affecting major economies. China’s growth
declined following a combination of needed regulatory
tightening to rein in shadow banking and an increase in
trade tensions with the United States. The euro area
economy lost more momentum than expected as
consumer and business confidence weakened and car
production in Germany was disrupted by the introduction
of new emission standards; investment dropped in Italy
as sovereign spreads widened; and external demand,
especially from emerging Asia, softened. Elsewhere,
natural disasters hurt activity in Japan. Trade tensions
increasingly took a toll on business confidence and, so,
financial market sentiment worsened, with financial
conditions tightening for vulnerable emerging markets in
the spring of 2018 and then in advanced economies later
in the year, weighing on global demand.
(International Monetary Fund,
https://www.imf.org/en/Publications/WEO/Issues/2019/
03/28/world-economic-outlook-april-2019 , April 2019)
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
3 www.avenuinsights.com
Trade Deficit: A narrower U.S. trade deficit in February
and stronger-than-expected economic growth in China
suggested the global economy’s outlook may be
brightening headed into the spring. The U.S. deficit on
trade in goods and services narrowed 3.4% in February
from the prior month, in part to a pickup in exports.
(U.S. Commerce)
US and China Trade Deficit and Tariff: The U.S. and
China are planning two rounds of face-to-face meetings
as they seek to wrap up a trade deal, with negotiators
aiming for a signing ceremony in late May or early June.
Issues remain unresolved, especially the question of
which tariffs will be removed on either side. Removing
tariffs on $200 billion in imports from China would still
leave tariffs on $50 billion in Chinese products. Those
levies led to retaliation against U.S. farm products last
year. (April 17, 2019, WSJ)
US Trade Gap: Falls 15% in January as Americans buy
less from China: The monthly U.S. trade deficit fell by
nearly 15% in January, largely due to a shift with China as
the two countries continue to negotiate a new trade
agreement. (https://www.census.gov/foreign-
trade/Press-Release/current_press_release/ft900.pdf and
https://www.bea.gov/news/blog/2019-04-17/february-
2019-trade-gap-494-billion, April 17, 2019)
U.S. Import and Export Price Index for March 2019:
Increased 0.6% following a 1.0% rise in February. Both
the March and February advances were driven by higher
fuel prices. U.S. exports: Rose 0.7% for the second
consecutive month in March. Both agricultural and
nonagricultural prices contributed to the increase.
(https://www.bls.gov/news.release/ximpim.nr0.htm,
April 12, 2019)
North American Free Trade Agreement: The Trump
administration’s deal to replace NAFTA will boost the U.S.
economy by 0.35% and lead to 176,000 new jobs in the
sixth year after implementation. A report by the
International Trade Commission (ITC) will be used by law
makers as they consider whether to support the U.S.-
Mexico-Canada Agreement, which the three countries
signed last year and still needs congressional approval.
The ITC estimated that USMCA would increase U.S.
exports to Canada by $19.1 billion and boost shipments
to Mexico by $14.2 billion. American imports would
increase by $19.1 billion from Canada and $12.4 billion
from Mexico. American auto parts manufacturers and
dairy farmers stand to benefit, as do service industries
that would find it easier to do cross-border business.
(https://www.bloomberg.com/news/articles/2019-04-
18/usmca-to-boost-u-s-economy-0-35-as-itc-report-adds-
to-debate?srnd=economics-vp and
https://www.usitc.gov/publications/332/pub4889.pdf,
April 18, 2019)
Year in Review (2018) CPI Indexes
All Items for 2018: Rose 1.9% in 2018, a smaller increase
than the 2.1% increase in 2016 and 2017, but larger than
the increases in any of the years from 2012 to 2015.
Food: Increased 1.6% in 2018, the same increase as in
2017. Food at Home: Increased 0.6% in 2018.
Nonalcoholic Beverages: Increased 1.4% in 2018 after
being unchanged in 2017. Energy: Fell slightly in 2018,
declining 0.3% after rising 6.9% in 2017. Gasoline: Fell
2.1% in 2018 after rising in 2016 and 2017. The decline in
the gasoline index more than offset increases in other
energy component indexes. Electricity: Increased 1.1%
in 2018 after rising 2.6% the prior year. Medical Care:
Rose 2.0% in 2018, a slightly larger increase than its 1.8%
increase the year prior. Hospital Services: Rose 3.7%,
while the physicians' services index increased 0.6%.
Motor Vehicle Insurance: Rose 4.6% in 2018 following
larger increases in recent years. New Vehicles: Fell for
the second year in a row, decreasing 0.3% after a -0.5%
decline in 2017. Used Cars and Trucks: Rose 1.4% in
2018 after decreasing in each of the prior 2 years.
Education Index: Increased 2.6% in 2018.
(https://www.bls.gov/opub/ted/2019/consumer-price-
index-2018-in-review.htm)
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
4 www.avenuinsights.com
Services Revenue
Services Sector Revenue for 4Q2018 Total Revenue: An
increase of 1.3% from 3Q2018 and up 6.3% from 4Q2017.
Information Sector: An increase of 1.2% from 3Q2018
and up 7.9% from 4Q2017. Transportation/
Warehousing: An increase of 2.4% from 3Q2018 and up
8.3% from 4Q2017. Utilities: An increase of 1.1% from
3Q2018 and up 3.9% from 4Q2017. Real Estate, Rental,
and Leasing: An increase of 1.1% from 3Q2018 and up
7.3% from 4Q2017. Professional, Scientific, and
Technical Services: An increase of 0.8% from 3Q2018
and up 5.6% from 4Q2017. Accommodations: A
decrease of 7.0% from 3Q2018 and up 2.5% from
4Q2017. Arts and Entertainment: A decrease of 3.8%
from 3Q2018 and up 6.2% from 4Q2017. Other Services:
An increase of 5.8% from 3Q2018 and a decrease of 3.1%
from 4Q2017.
(https://www.census.gov/services/qss/qss-current.pdf,
March 21, 2019)
E-Commerce and Retail Sales
Retail Sales for March 2019: An increase of 1.6% from
the previous month, and 3.6% above March 2018. Total
sales for the January 2019 through March 2019 period
were up 2.9% from the same period a year ago. The
January 2019 to February 2019% change was unrevised
from down 0.2%. Retail trade sales were up 1.7% from
February 2019, and 3.5% above last year. Non-store
retailers were up 11.6% from March 2018, while sporting
goods, hobby, musical instrument, and book stores were
down 9.7% from last year.
(https://www.census.gov/retail/marts/www/marts_curre
nt.pdf, April 18, 2019)
As a Percent of Total U.S. Sales in 4Q2018: Retail E-
Commerce increased 2% from 3Q2018. Total Sales in
4Q2018: 4Q2018 E-commerce sales in the fourth quarter
of 2018 accounted for 9.9% of total sales. Total Sales in
2018: Increased 4.8% from 2017. E-commerce sales in
2018 accounted for 9.7% of total sales. E-commerce sales
in 2017 accounted for 8.9% of total sales.
(https://www.census.gov/retail/mrts/www/data/pdf/ec_
current.pdf, March 13, 2019)
Consumer Spending, Debt, and Borrowing
Consumer Finances / Federal Reserve Survey:
The Federal Reserve Board in March began its Survey of
Consumer Finances, a statistical study of household
finances that provides policymakers with important
insight into the economic condition of a broad cross
section of American families. The data will provide a
picture of what Americans own (from houses and cars to
stocks and bonds), how and how much they borrow, and
how they bank. Past study results have contributed to
policy discussions about the recovery of households from
the Great Recession, changes in the use of credit, the use
of tax-preferred retirement savings accounts, and a broad
range of other issues.
(https://www.federalreserve.gov/newsevents/pressreleas
es/files/other20190213a1.pdf)
Quarterly Report on Household Debt and Credit: Total
household debt rose by $32 billion, or 0.2%, in 4Q2018 to
reach $13.54 trillion. The total is now $869 billion higher
than the previous peak of $12.68 trillion in 3Q2008, and
21.4% above the post-financial-crisis trough reached in
2Q2013. Mortgage balances: Stood at $9.1 trillion, as
shown on consumer credit reports on December 31,
essentially unchanged from 3Q2018. Balances on home
equity lines of credit (HELOC): Continued declining from
2009, with a drop of $10 billion in 4Q2018, the lowest
level seen in 14 years. Non-housing balances: Increased
by $58 billion in 4Q2018, with auto loans increasing by $9
billion, credit card balances going up by $26 billion, and
student loan balances by $15 billion. Some 4.47% of
auto-loan balances were delinquent in 4Q2018. More
than 8% of borrowers with credit scores below 620
became delinquent in 4Q2018.
(https://www.newyorkfed.org/)
Consumer Debt and Borrowing: Borrowing rises for cars
but falls in housing market. Including credit cards, auto
and student, and personal loans is expected to top $4
trillion in 2019. Easing the burden are the growing U.S.
economy, wage gains, unemployment near a 50-year low,
and relatively low interest rates.
(https://www.treasurydirect.gov/govt/reports/pd/pd_de
bttothepenny.htm, Federal Reserve, January 8, 2019)
Attachment C
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5 www.avenuinsights.com
Digital Economy
Digital economy real value added grew at an average
annual rate of 9.9% per year from 1997 to 2017,
compared to 2.3% growth in the overall economy. The
digital economy accounted for 6.9% of current-dollar GDP
in 2017, up from 5.9% in 1997.
In March 2018, the Bureau of Economic Analysis (BEA)
released, for the first time, preliminary statistics and an
accompanying report exploring the size and growth of the
digital economy. BEA includes in its definition of the
digital economy three major types of goods and services:
the digital-enabling infrastructure needed for an
interconnected computer network to exist and operate;
the e-commerce transactions that take place using that
system; and digital media, which is the content that
digital economy users create and access. The updated
estimates continue to show the digital economy has been
a bright spot in the U.S. economy. Digital economy real
value added grew at an average annual rate of 9.9% per
year from 1997 to 2017, compared to 2.3% growth in the
overall economy. When compared with traditional U.S.
industries or sectors, the digital economy ranked just
below professional, scientific, and technical services,
which accounted for 7.4% of current-dollar GDP, and just
above wholesale trade, which accounted for 6.0%
($1,174.1 billion) of current-dollar GDP.
(https://www.bea.gov/system/files/2019-04/digital-
economy-report-update-april-2019_0.pdf)
Forecasts
GDP Growth Forecast: 2.5% in 2019. Down from 2.9% in
2018. Interest Rates: 10-year T notes ending 2019 at
2.8%, from 2.5% currently. Inflation: 2.2% at end of
2019, up from 1.9% at end of 2018. Unemployment:
Expected to be 3.6% by the end of 2019, from 3.8%
currently. Crude Oil: Trading at $55 to $60 per barrel in
June. Trade Deficit: Up 7%-8% to $665 billion this year.
(Kiplinger, April 12, 2019)
Consumer Spending Forecast: Americans’ purchases
make up nearly 70% of economic activity and is expected
to continue to underpin growth in 2019. The average
household should save $224 to $480 on gas in 2019.
Spending should grow 2.7% in 2019. (Wolters Kluwer /
Moody’s)
2019 / 2020 Forecast / Economy will Downshift: The
economy is in the process of downshifting from the 3%
growth in real GDP this year to 2% in 2019 and 1% in
2020. (UCLA, December 2018)
Hotel Industry Forecast: The hotel industry will log the
10th consecutive year of growth in 2019. Supply growth
also will slow to 1.9% in 2019 and 2020 respectively,
leaving occupancy rates flat in 2019 at 66.2% and then
dipping to 66.1% in 2020. (BTN, January 2019)
Lower Tax Refunds – Impact on Spending: Lower tax
refunds this spring may ding spending on some big-ticket
items, such as motor vehicles. Tax reform led to lower
rates and lower withholding in 2018, and fewer people
will itemize deductions. The end result: Smaller average
refunds. Refunds are used down payments on all sorts of
major purchases. The average tax refund for 2017 was
close to $3,000. It will be less for many this year. Areas
in the Northeast and on the Pacific coast will see the
biggest impact from the cap on the deduction for state
and local property, income, and sales taxes.
Employment and Job Market
Employment Characteristics of Families in 2018: 5.2% of
families included an unemployed person, down from
5.8% in 2017. Of the nation's 82.5 million families, 80.8%
had at least one employed member in 2018.
(https://www.bls.gov/news.release/famee.nr0.htm, April
18, 2019)
Unemployment: Remained at 3.8% in March, and the
number of unemployed persons was essentially
unchanged at 6.2 million.
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
6 www.avenuinsights.com
Jobless Claims Lowest Since September 1969: Initial
jobless claims fell for the week ending April 13 fell to
192,000, the lowest since September 1969. Economists
had projected an increase.
(https://www.bls.gov/news.release/empsit.nr0.htm,
Labor Department, April 5, 2019)
Manufacturing
Manufacturing output was flat in March after falling in
the first two months of 2019. For the first quarter as a
whole, manufacturing output declined at an annual rate
of 1.1%, the first drop since output fell 1.6% in the third
quarter of 2017. More broadly, industrial production, a
measure of output at factories, mines and utilities, fell
0.1% in March. Declines among wood products as well as
motor vehicles and parts, both of which fell by more than
2% on the month, dragged down manufacturing output.
Production of textiles, coal products and chemicals all
rose, helping offset losses in other categories.
(https://www.federalreserve.gov/releases/g17/current/g
17.pdf?mod=article_inline and WSJ April 16, 2019)
Manufactured Goods Data: New orders in February
decreased by 1.6%. This follows three consecutive
months of increase. February Shipments: Up three of
the last four months, increasing 0.5%. This followed a
0.4% January decrease. (Census, April 2, 2019)
U.S. Residential Sales and Housing
National New Home Sales: Sales of previously owned
homes fell in March from February by 4.9%. Sales as a
whole are down 5.4% from a year ago (5.51 million in
March 2018). Existing-home sales in the West fell 6.0% to
an annual rate of 1.09 million in March, 10.7% below a
year ago. The median price in the West was $389,300, up
3.1% from March 2018. Realtor.com®’s Market Hotness
Index, measuring time-on-the-market data and listing
views per property, revealed that the hottest metro areas
in March were Columbus, Ohio; Boston-Cambridge-
Newton, MA.; Midland, Texas; Sacramento--Roseville--
Arden-Arcade, CA; and Stockton-Lodi, CA. (NAR, April 22,
2019)
Mortgages and Rates: Many first-time home buyers will
have a tougher time getting a mortgage. The Federal
Housing Administration is tightening its underwriting
requirements for FHA-insured loans because the agency
is worried that too many risky mortgages are being made.
The move reverses a 2016 decision to loosen
underwriting standards. Now, lenders will have to do
more time-consuming manual underwriting for the
riskiest borrowers. About 83% of FHA loans go to first-
time home buyers. Lenders say they will see a reduction
in their FHA business of up to 15%. Originations will
shrink by about 5% to 15%. The impact will be felt in a
few months. (Kiplinger April 12, 2019)
House Flipping Surges: Back to the same level it was
around the 2006 housing boom when it became a symbol
of the rampant speculation before the bubble burst.
Some of the 10.6% homes sold in the U.S. in 4Q2018
were flips, defined as having been owned for less than
two years. (CoreLogic)
U.S. and China Tariff
Examining Effects of the Tariffs on the California
Economy: By a significant margin, California ranks as the
nation’s number one importer of Chinese goods and
services. According to the U.S. Census Bureau, 2017
Chinese imports to California totaled more than $159
billion, accounting for 36% of the state’s imports. In
comparison, Texas, China’s second-largest U.S. import
partner, had a Chinese import total of $43 billion. China
also represents a significant export destination for
California products, ranking as the state’s third largest
export destination behind Mexico and Canada. In 2017,
California exports to China totaled $16 billion. Exports to
China from California consist largely of computers and
electronics, transportation equipment, agricultural
products (especially fruits and nuts), software, and
machinery. https://sco.ca.gov/Files-
EO/2019_01summary.pdf;
https://www.bls.gov/news.release/ximpim.nr0.htm;
https://www.bea.gov/news/2019/us-international-trade-
goods-and-services-february-2019
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ECONOMIC NEWS & TRENDS April 26, 2019
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Durable Goods: Inventories of long-lasting durable goods
are piling up in warehouses. Partly as a result of lower
sales, inventories of goods such as machinery and
computers climbed by 0.3% in Feb., after a 0.5% increase
in Jan. The growing stockpiles should buoy first-quarter
GDP by up to 0.6 points. Some buildup is the unintended
effect of weak shipment growth. Another factor:
Boeing’s recent troubles have led to some canceled
orders of its 737 Max aircraft. Expect overstocked
inventories to be drawn down by the second quarter.
(Kiplinger, April 12, 2019)
PART 2: CALIFORNIA ECONOMIC INDICATORS / INFLUENCES
California Revenues for February 2019: Total: $5.51
billion in February or lower than forecasted in the
governor’s proposed 2019-20 fiscal year budget by
19.5%, and in the FY 2018-19 Budget Act by 26.7%. Two-
thirds of the way through FY 2018-19, total revenues of
$79.93 billion were lower than expected in the proposed
and enacted budgets by $4.20 billion and $3.33 billion,
respectively. Sales and Corporation Taxes: Sales tax
receipts of $3.76 billion for February were $407.7 million
higher than anticipated in the proposed FY 2019-20
budget but $58.3 million less than expected in the FY
2018-19 Budget Act. Corporation taxes of $258.4 million
in February were 59.8% higher than estimates in the FY
2019-20 proposed budget and 78.5% higher than in the
enacted FY 2018-19 budget. Personal Income Tax (PIT):
56.6%, less than the Department of Finance forecasted in
January; and 59.5%, lower than assumed in the budget
enacted last June. In the current fiscal year, PIT is 6.0%
below the FY 2018-19 budget forecast. (State Controller,
March 2019)
California CPI: San Francisco, Oakland, and Hayward
Area: Up .5% in March influenced by higher prices for
shelter and gasoline. West Region: Up 0.4% in March,
influenced by higher prices for shelter and gasoline.
Los Angeles Area: Up by 0.6% in March, influenced by
higher prices for shelter and gasoline. Riverside:
Up 0.7% in March influenced by higher prices for shelter
and gasoline. San Diego Area: Up 0.5% in March
influenced by higher prices for shelter, electricity, and
gasoline. (BLS, March 2019)
Personal Income: California personal income increased
4.7% in 2018 following an increase of 4.6% in 2017 while
U.S. personal income grew 4.5% in 2018 following growth
of 4.4% in 2017. California has outpaced the U.S. in
annual personal income growth for a ninth consecutive
year. U.S. real GDP rose 2.9% in 2018 after rising 2.2% in
2017. (BEA, March 29, 2019; DOF, April 2019)
California’s Labor Market: Unemployment remained at
4.2% in February. The U.S. unemployment rate dropped
by 0.2% to 3.8% in February and remained at that level in
March. California’s labor force participation rate rose by
0.1% to 62.8% in February, the state’s highest rate since
August 2013, while the nation’s was unchanged at 63.2%
in February before falling to 63.0% in March. (DOF, April
2019)
Tax Windfall for California: California is expecting a
windfall from a slate of initial public offerings including
Lyft. Nearly 10% of the tax revenue in the next fiscal year
was already expected to come from capital gains.
Governor Newsom’s January proposed budget anticipates
a $21.5 billion surplus.
California Housing and Interest Rate Forecast: The
California Association of Realtors forecast a modest
decline in existing single-family home sales of 3.3% in
2019 to reach 396,800 units, down from the projected
2018 sales figure of 410,460. The average for 30-year,
fixed mortgage interest rates will rise to 5.2% in 2019, up
from 4.7% in 2018 and 4.0% in 2017, but will remain low
by historical standards. The California median home
price is forecast to increase 3.1% to $593,450 in 2019,
following a projected 7.0% increase in 2018 to $575,800.
(CAR)
California Residential Sales, 4th Quarter 2018: 28% of
California households could afford to purchase the
$564,270 median-priced home in the 4Q2018, up from
27% in 3Q2018 and down from 29% a year ago. A
minimum annual income of $122,340 was necessary to
make monthly payments of $3,060, including principal,
interest, and taxes on a 30-year fixed-rate mortgage at a
4.95% interest rate. 37% of home buyers were able to
purchase the $460,000 median-priced condo or
townhome. An annual income of $99,730 was required
to make a monthly payment of $2,490. (CAR)
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
8 www.avenuinsights.com
Real Estate Sales in California: Increased 11.3% in
February after falling 3.7% in January. The statewide
median home price was $534,140 in February, down 0.6%
from January but up 2.2% from February 2018. The 30-
year fixed-mortgage rate averaged 4.37% in February, its
lowest point in a year. Existing, single-family home sales
totaled 397,210 in March on a seasonally adjusted
annualized rate, down 0.2% from February and down
6.3% from March 2018. (DOF, April 2019; CAR, March
2019)
California Building Permits: Residential building permits
issued for the first two months of 2019 averaged 127,000
units on a seasonally adjusted annualized basis, up 2.4%
from the same period in 2018. Single-family permits
were down 10% to 54,000 units, while multifamily
permits were up 14% to 73,000 units. Nonresidential
building posted an annualized valuation of $30 billion for
the first two months of this year, which is down 11% from
the same period last year. (DOF, April 2019)
CDTFA Cannabis Revenues for 4Q2018: Tax revenue
reported by the cannabis industry totaled $103.3 million
for Q4 returns due by January 31, 2019, which includes
state cultivation, excise, and sales taxes. It does not
include tax revenue collected by each jurisdiction. As of
February 14, 2019, the cannabis excise tax generated
$50.8 million in revenue reported on Q4 returns due by
January 31, 2019. The cultivation tax generated $16.4
million and the sales tax generated $36.1 million in
reported revenue. California took in $345.2 million in tax
revenue from legal cannabis during the first year of
regulated sales in 2018. The prediction had been $1
billion in annual revenue.
(https://cannabis.ca.gov/2019/02/19/california-
department-of-tax-and-fee-administration-reports-
cannabis-tax-revenues-for-fourth-quarter-of-2018/)
PART 3: RETAIL NEWS / E-COMMERCE
2018 Retail Results
4Q2018 Retail Sales: U.S. retail and food services sales
for December 2018 decreased 1.2% from the previous
month, but 2.3% above December 2017. Total sales for
2018 was up 5.0% from 2017. Total sales for the 2018
October through December period was up 3.7% from the
same period a year ago. Clothing and accessories stores
were up 4.7% from December 2017, while food services
and drinking places were up 4.0% from last year.
(https://www.census.gov/retail/marts/www/marts_curre
nt.pdf)
2018 Holiday Sales
Holiday Spending: Retail sales rose 5.1% between
November 1 and December 24 from a year ago. Total
sales topped $850 billion this year. Online sales
continued to grow, up more than 19% from a year ago.
Online sales made up 13% of total retail sales. Clothing
sold well, up nearly 8% from last year, the biggest growth
for apparel sales since 2010. Home furniture sales rose
2.3%, while electronics and appliances slipped 0.7%.
Shoppers used the websites of department stores, where
sales rose 10.2%. (WSJ, Mastercard, December 26, 2018)
Amazon Holiday Season: Amazon announced a record-
breaking holiday season with more items ordered
worldwide than ever before. Best Seller Trends: Toys,
Electronics, Amazon Brands, Amazon Fashion. Fast and
Free Shipping: Free two-hour delivery offered through
Prime Now. Amazon Physical Store: Customers shopped
at physical stores, including Amazon Books, Amazon 4-
star locations, Amazon Go, and Whole Foods Market.
Walmart Holiday Season: In the U.S., the comparable
sales which exclude gas but include e-commerce sales
rose 4.2% in the January-ended quarter, one of the
biggest quarterly sales increases in a decade. The
increase is from grocery sales, online orders, and holiday
purchases including toys.
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
9 www.avenuinsights.com
2019 Retail Results
January to March 2019: Retail sales had dropped in
February, after a jump in January that hadn’t fully offset a
sharp decline in December. In March, by contrast, the
gauge of spending at restaurants, brick-and-mortar
establishments, and online stores increased a seasonally
adjusted 1.6% from a month earlier to $514.1 billion.
This was the largest monthly gain since September 2017.
Outlays on cars and car parts, along with spending at gas
stations, propelled overall spending in March, with auto
sales clocking the heftiest month-on-month gain since
last fall. Gas prices have risen, which increased the
amount consumers spent at gas stations. Outlays at
clothing stores grew at the fastest pace in almost a year.
Prices for major appliances increased 8.8% during this
period.
Retail Data: Advance estimates of U.S. retail and food
services sales for March 2019 were an increase of 1.6%
from the previous month, and 3.6% above March 2018.
Total sales for the January 2019 through March 2019
period were up 2.9% from the same period a year ago.
Non-store retailers were up 11.6% from March 2018,
while sporting goods, hobby, musical instrument, and
book stores were down 9.7% from last year.
https://www.census.gov/retail/marts/www/marts_curre
nt.pdf
Consumer Spending: Picking up after winter. Spending,
minus gasoline, surged 1.4% in March, bouncing back the
most for clothing, cars, furniture and at grocery stores. E-
commerce picked up strongly, too. Electronics and
sporting goods sales are still significantly below last year’s
levels. Spending growth will not reach last year’s pace,
though. Excluding autos and gas, spending will rise 4%
this year, down from 4.6% in 2018. In-store sales will rise
2%, after 2018’s 3.2%. For e-commerce, expect 11%
growth, versus 14% in 2018. The segment will become
one-fifth as big as all in-store spending by 2020.
(Kiplinger, April 19, 2019)
Imports Strain Warehouses in California: In January,
estimated seaborn imports to the U.S. rose 4.1% year-
over-year. Imports surged after U.S. trade officials
announced on January 1 a plan in September to raise
tariffs on $200 billion in Chinese imports by 25%. During
the last three months of 2018, import volume at the
ports of Los Angeles and Long Beach increased 9% over
the same period a year earlier. (WSJ, February 20, 2019)
Retailer Partner Returns from On-Line Sales: Walgreens
Boost Alliance and Nordstrom will let online shoppers at
other brands and retailers pick up and return order at
some stores, a sign of how retailers are partnering in new
ways to draw customers as more shopping shifts online.
(WSJ, April 18, 2019)
Attachment C
ECONOMIC NEWS & TRENDS April 26, 2019
10 www.avenuinsights.com
PART 4: AUTO SALES AND GASOLINE
California Auto Sales in 2018: Percent of total statewide
sales tax collected in 2018: 13%. New vehicle sales in
2018: 2,001,995. Used retail vehicles sold: 891,875.
2019 Prediction: The state’s new vehicle market is
predicted to decline 2% from 2018 to 2019, which would
be the third consecutive annual decline. (CNCDA,
February and March 2019)
National Auto Sales: 1Q2019: Major auto makers
posted declines in U.S. sales for the first quarter, adding
pressure on car companies already grappling with weaker
conditions in important markets globally. The first-
quarter decline with sales down between 2% and 3%
makes it likely that full-year U.S. sales will fall below 17
million vehicles for the first time since 2014.
California Electric Vehicle Sales: Increased in 2018, but
consumers prefer gas vehicles. In 2018, gas cars made up
more than 85% of total new cars sold. 2018’s electric
vehicle market saw an increase of 2.1% from 2017,
primarily attributed to Tesla’s Model 3, which made up a
majority of electric vehicle sales with more than 51,000
vehicles sold. The Toyota Prius came in second place in
the alternative powertrain market, selling just over
19,000 hybrids in 2018. Total hybrid sales actually
dropped in 2018, down 0.5% from 2017.
California and National Gas Influences: Price as of April
22, 2019. California’s average is 4.031 (the average a
year ago was $3.579). Prices in California are more than a
dollar per gallon above the national average. Issues at
refineries in California, including the Phillips 66 in Los
Angeles County, Valero in Benicia, and Chevron in
Richmond, along with planned maintenance at others,
have constricted supply in the state, which in turn raised
prices. California has strict environmental rules for gas,
which makes it difficult to import fuel when its refineries
have production glitches. (American Automobile
Association and GasBuddy).
PART 5: RESTAURANT AND GROCERY TRENDS
Dining and Food: The CPI measures the change in prices
paid by consumers for goods and services. The food
index rose 0.3% in March following a 0.4% increase in
February. Food at Home: Jan 2019 (0.1%); Feb 2019
(0.4%); Mar 2019 (0.4%). Food Away From Home: Jan
2019 (0.3%); Feb 2019 (0.4%); Mar 2019 (0.2%).
(https://www.bls.gov/news.release/cpi.nr0.htm, April 10,
2019)
U.S. Grocery Store Openings Increased 30% in 2018:
New grocery store openings were up 30% in 2018, with
more than 17 million square feet of space added in the
United States. More than one-quarter of the new stores
were in Florida, California and Texas due to expansion by
their respective local market-leading grocers: Publix,
Sprouts Farmers Market, Aldi, Kroger and H-E-B.
Grocery is one of the strongest retail sectors, with nearly
twice as many new stores opening than closing last year.
(JLL’s Grocery Tracker 2019 report, March 27, 2019
Supermarket News)
Online Grocery Upheaval: Online ordering and delivery
has been around in the U.S. grocery business for decades,
but it hasn’t caught on as rapidly as it has in other
sectors. Many U.S. shoppers live close to supermarkets
and prefer to select food from the aisles. That is
changing as more young people form families and older
people get more comfortable ordering online. One
option proving especially popular is for consumers to
order groceries online for pickup in a store’s parking lot.
Online purchases account for 5% of the roughly $1 trillion
U.S. food and consumer-product market. Yet online sales
are growing 40% annually, while in-store sales have been
flat for years. (Nielsen)
Alcohol Import Tax: In late December, regulations were
finalized limiting the ability of U.S. wineries and global
companies to reduce import taxes. The federal
government’s view is that the rules stop wine and spirits
companies from double-dipping on tax breaks. The
change is expected to yield more that $600 million for the
government over the next decade.
(https://www.wsj.com/articles/trump-administration-
blocks-tax-break-for-alcohol-companies-11545075911)
Attachment C
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PART 6: SELECTED RETAIL UPDATES
Sources: The Shelby Report; Plain Vanilla Shell, California
Employment Development Department - Period Covered:
November 1, 2018 to April 22,2019. As of April 18, 2019,
according to Coresight Research, year-to-date U.S.
retailers have announced 4,810 store closures and 2,264
store openings.
Apple: Apple and Amazon reached an agreement to
increase the amount and range of Apple products
Amazon sells on its site.
Ace: 4Q2018 revenues up 5.7% from 4Q2017.
Albertsons: Merger with Rite Aid did not happen.
Aldi: 15 new stores in 2019 in So Cal.
Amazon: Grocery grew 45% in 2018.
Amazon Pop Up Stores: To close 87 locations in stores
like Kohls and Whole Foods.
Bed Bath & Beyond: To close about 40 stores and open
15 new stores in 2019.
Blue Apron: New partnership with Weight Watchers.
Blue Diamond: Expanding California manufacturing plant
to Turlock.
Burger King: Expanded deliveries.
Chicos: To close 250 stores over three years.
Chick-fil-A: On track to become the third-largest chain in
the U.S., behind McDonalds and Starbucks.
Chipotle: Opens 2,500 restaurants; digital sales grow
42%.
Curry Up: Acquired Tava Kitchen.
Dollar Tree: Plans to open a total of 550 stores in 2019.
Family Dollar: To close as many as 390 stores.
FarmStead: San Francisco-based online grocer is
lowering prices and offering refill and save program.
Foot Locker: Closing 165 stores.
Gap: To close 230 stores over the next two years.
Gelson’s: In-store wine bars debut ‘robot bartender.’
Godiva: Opening first café in the U.S.
Grocery Outlet: Rides the discount wave; opened 30
stores in 2018 and plans for 40 more in 2019. Partnering
with RangeMe, an online platform for sourcing.
Gymboree: Reportedly planning to close all 900 stores.
IHOP: Now American’s largest casual dining chain.
JC Penny: Closing 27 stores.
Jet.com: Introduced experiences in New York tailored to
the lifestyle of city dwellers who can choose three-hour
scheduled same day and next day windows.
Kmart: Closures in Auburn, Stockton, Santa Maria,
Burbank, and Apple Valley.
Kohls: Announced 4 non-California closures.
Kroger’s: Acquired Home Chef.
Levi Strauss: Expanding with store expansions.
Lifeway Christian: Closing all 170 stores.
Lowes: To close 20 stores.
New Seasons Market: Increase starting pay for staff.
Payless ShoeSource: Closing 2,590 stores.
Pier 1 Imports: To close up to 145 stores.
P.F. Changs: The chain is debt-burdened and in
agreement to be sold.
Rebag: To open 30 brick and mortar stores including
locations in Los Angeles.
Raley’s: Relaunches private label lines with greater
transparency.
REI: Reports more sales, income, and members.
Round Table: Rebranding.
Saks Off 5th: To close 20 stores.
Samuel Jewelers: To close all its stores.
Signet Jewelers: Parent of Kay, Zales, and Jared will close
another 150 stores.
Sleep Outfitters: Files for bankruptcy.
Starbucks: Scales back plans for upscale shops to revive
sales.
Sears: To close 72 stores.
Sprouts: Expanding with 19 new stores.
Tesla: To sell only online. Will begin shutting stores.
Things Remembered: To close 422 stores.
Vera Bradley: To close 50 stores.
Victoria Secret: To close 53 stores.
Vons: Opens replacement store on Catalina Island.
Walmart: Pilot grocery delivery in the U.S. with
autonomous cargo vans.
Whole Foods: Amazon will be ending Whole Foods
partnership with Instacart. Amazon will offer its own
delivery services for Whole Foods.
Contact: Tracy Vesely, Director of Client Services /
Tracy.Vesely@avenuinsights.com
Attachment C