HomeMy WebLinkAbout2018 Sales Tax Digest Third 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 Third Quarter Sales (July -
September 2018)
We received $9.7 million for third quarter sales of 2018 which is $2.3 million (30.1 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 December 2018
Sales through September 2018 (2018Q3)
www.avenuinsights.com (800)800-8181 Page 1
California Overview
The percent change in cash receipts from the prior year was 3.9% statewide, 5.1% in Northern California
and 3.0% 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 3rd Quarter 2018 by
5.0% statewide, 4.3% in Southern California and 6.2% in Northern California.
City of Palo Alto
For the year ended 3rd Quarter 2018, sales tax cash receipts for the City increased by 30.1% from the
prior year. On a quarterly basis, sales tax revenues increased by 8.2% from 3rd Quarter 2017 to 3rd
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 13.6% for the year ended 3rd Quarter 2018 from the prior year.
On a quarterly basis, sales tax activity increased by 23.6% in 3rd Quarter 2018 compared to 3rd 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 29.4 / 0.1 27.0 / 1.8 24.9 / 1.7 26.9 / 1.5 30.4 / 3.9 27.6 / 1.7 26.8 / 3.5 28.2 / -5.9 29.2 / 2.6
Food Products 17.2 / 3.6 20.8 / 5.0 21.6 / 3.7 17.4 / 6.4 16.4 / 5.1 22.6 / 5.5 17.2 / 7.9 17.6 / -9.7 30.6 / 5.1
Construction 1.3 / -42.2 9.9 / 13.7 9.9 / 13.3 11.8 / 15.3 11.8 / 16.4 8.9 / 12.7 11.3 / 14.9 13.3 / 6.4 8.1 / 25.4
Business to Business 27.6 / 29.1 17.2 / 5.2 20.4 / 7.0 14.1 / 4.2 15.2 / 9.7 16.8 / 4.6 16.4 / 2.5 10.2 / -4.4 8.6 / 1.7
Misc/Other 24.5 / 33.0 25.0 / 5.2 23.3 / 12.2 29.8 / 5.1 26.3 / 5.0 24.2 / 3.3 28.3 / 3.9 30.6 / -7.4 23.4 / 8.9
Total 100.0 / 13.6 100.0 / 5.0 100.0 / 6.6 100.0 / 5.3 100.0 / 6.6 100.0 / 4.3 100.0 / 5.4 100.0 / -5.5 100.0 / 6.3
City of Palo
Alto
California
Statewide
S.F. Bay
Area
Sacramento
Valley
Central
Valley South Coast Inland
Empire North Coast Central
Coast
Largest Segment Auto Sales -
New Restaurants Restaurants Auto Sales -
New
Department
Stores Restaurants Restaurants Department
Stores Restaurants
% of Total / % Change 17.7 / 33.1 14.8 / 3.6 15.6 / 3.7 13.3 / 3.5 12.1 / 0.9 16.6 / 3.6 11.3 / 4.5 10.7 / -4.1 21.8 / 4.0
2nd Largest Segment Restaurants Auto Sales -
New
Auto Sales -
New Restaurants Restaurants Auto Sales -
New
Auto Sales -
New Restaurants Auto Sales -
New
% of Total / % Change 15.2 / 4.1 10.9 / 3.2 11.7 / 12.6 11.6 / 5.3 10.6 / 3.8 10.5 / 0.8 10.2 / -1.3 10.4 / -9.7 11.4 / 10.4
3rd Largest Segment Office
Equipment
Department
Stores
Department
Stores
Department
Stores
Auto Sales -
New
Department
Stores
Department
Stores
Auto Sales -
New
Miscellaneo
us Retail
% of Total / % Change 12.1 / 40.2 8.7 / 0.4 7.0 / 1.5 10.3 / 0.6 10.4 / -0.1 8.4 / 0.7 9.7 / 0.2 10.1 / -10.3 9.9 / 4.4
*** Not specified to maintain confidentiality of tax information
CITY OF PALO ALTO
BENCHMARK YEAR 2018Q3 COMPARED TO BENCHMARK YEAR 2017Q3
ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 3rd Quarter 2018
ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 3rd 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 3rd Quarter 2018: $31,970,336
*Benchmark year (BMY) is the sum of the current and 3 previous quarters (2018Q3 BMY is sum of 2018 Q3, Q2, Q1, 2017 Q4)
Restaurants
13.2%
Leasing
8.1%
Department Stores
6.3%
Furniture/Appliance
6.5%
Food Markets
1.4%
Recreation Products
0.9%
All Other
50.8%
Net Pools & Adjustments
12.7%
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 3rd Quarter 2018. The Top 25 Sales/Use Tax contributors generate 54.0%
of Palo Alto’s total sales and use tax revenue.
Anderson Honda Hp Enterprise Services Shell Service Stations
Apple Stores Integrated Archive Systems Tesla
Audi Palo Alto Lucile Packard Children's Hosp Tesla Lease Trust
Bloomingdale's Macy's Department Store Tiffany & Company
Bon Appetit Management Co. Magnussen Toyota Urban Outfitters
Fry's Electronics Neiman Marcus Department Store Usb Leasing
Hewlett Packard Enterprise Company Nest Labs Varian Medical Systems
Hoover Pavilon Nordstrom Department Store Volvo Cars Palo Alto
Houzz Shop
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 2018Q3 Benchmark Year 2017Q3
Attachment A
City of Palo Alto
www.avenuinsights.com (800)800-8181 Page 4
Historical Analysis by Calendar Quarter
Economic Category % 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4 2016Q3 2016Q2 2016Q1
General Retail 19.9% 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 1,673,846
Misc/Other 22.6% 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 1,413,133
Food Products 12.2% 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 1,126,103
Business To Business 23.3% 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 1,140,526 974,162
Net Pools & Adjustments 22.0% 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 1,072,794
Total 100.0% 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 6,260,038
Economic Segments % 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4 2016Q3 2016Q2 2016Q1
Miscellaneous/Other 49.9% 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 2,607,097
Restaurants 10.9% 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 1,005,688
Miscellaneous Retail 3.7% 361,406 439,601 412,952 701,369 419,279 452,135 435,757 1,002,389 581,831 681,345 469,360
Department Stores 4.9% 475,142 495,267 471,419 642,666 458,066 510,561 392,565 641,541 491,433 546,629 435,470
Apparel Stores 4.6% 448,510 451,110 390,780 585,892 440,005 449,402 372,033 553,250 398,170 444,383 337,880
Service Stations 1.5% 148,751 154,446 163,072 148,906 147,499 159,371 119,552 130,396 138,155 144,735 123,004
Food Markets 1.0% 98,072 97,870 117,783 128,671 117,256 112,566 131,676 145,179 126,755 109,108 104,676
Business Services 0.5% 43,961 57,433 155,193 157,861 173,439 75,722 43,548 102,095 47,066 65,510 51,647
Recreation Products 0.9% 90,235 54,661 60,326 82,100 56,998 76,514 61,392 61,328 72,885 60,737 52,422
Net Pools & Adjustments 22.0% 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 1,072,794
Total 100.0% 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 6,260,038
*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 2017Q3 to 2018Q3
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Campbell -3.7% 5.3% 18.9% -3.0% 3.3%2,415,915 2,452,703 -1.5%Bldg.Matls-Retail Restaurants Office Equipment Office Equipment
Cupertino 1.8% 3.0% -53.4% 13.3% 3.3% 7,665,131 6,921,528 10.7%Office Equipment I.T. Infrastructure Bldg.Matls-Whsle Bldg.Matls-Whsle
Gilroy -1.3% 4.1% 1.1% 11.5% 8.8% 4,148,400 4,202,194 -1.3%Auto Sales - New Service Stations Bldg.Matls-Whsle Bldg.Matls-Whsle
Los Altos -3.8% 5.4% 12.8% 17.3% 4.6% 610,026 603,499 1.1%Restaurants Service Stations Miscellaneous Retail Miscellaneous Retail
Los Gatos -2.1% 1.0% 9.2% -15.2% -7.7% 1,518,474 1,616,401 -6.1%Service Stations Furniture/Appliance Miscellaneous Other Miscellaneous Other
Milpitas -3.3% -1.5% 7.8% -17.3% 2.5% 5,053,866 6,034,439 -16.2%Heavy Industry Bldg.Matls-Retail Office Equipment Office Equipment
Morgan Hill 1.6% 4.5% 31.1% 23.2% 10.2% 2,179,939 2,054,670 6.1%Electronic Equipment Service Stations Heavy Industry Heavy Industry
Mountain View 3.6% 5.5% 27.6% 14.1% 13.7% 4,473,925 3,907,618 14.5%Miscellaneous Retail Office Equipment Department Stores Department Stores
Palo Alto 0.1% 3.6% -42.2% 29.1% 33.0% 7,580,718 6,133,885 23.6%Auto Sales - New Office Equipment Electronic Equipment Electronic Equipment
San Jose 5.9% 3.5% 14.3% 6.0% 9.8% 41,476,337 38,731,014 7.1%Auto Sales - New Department Stores I.T. Infrastructure I.T. Infrastructure
Santa Clara -4.8% 1.0% 8.2% 5.9% -0.7% 12,272,971 11,804,654 4.0%Office Equipment Leasing Light Industry Light Industry
Santa Clara Co.5.8% 4.3% 88.0% 53.3% 24.6% 1,275,626 1,108,209 15.1%Bldg.Matls-Whsle Miscellaneous Other Auto Sales - Used Auto Sales - Used
Saratoga 1.2% -1.9% -12.3% 54.5% -1.0% 217,906 233,416 -6.6%Service Stations Business Services Food Markets Food Markets
Sunnyvale -1.4% 6.0% 9.2% 7.2% 10.9% 6,820,964 6,706,413 1.7%Light Industry Auto Sales - New Office Equipment Office Equipment
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 March 11, 2019
2 www.avenuinsights.com
The partial shutdown of the U.S. government delayed the
release of certain economic data. This report reflects the
most recent data available.
https://www.census.gov/newsroom/press-
releases/2019/revised-indicator-calendar.html
PART 1: NATIONAL ECONOMIC INDICATORS / INFLUENCES
Indicators and Influences
GDP: Grew 2.6% in 4Q2018: 3.4% in 3Q2018; and 4.2% in
2Q2018. Consumer spending was robust due to a strong
job market, tax cuts and household income gains.
Business investment, after faltering in the third quarter,
bounced back in the final three months of the year.
https://www.bea.gov/data/gdp/gross-domestic-product
(February 28, 2019)
Consumer Price Index: The CPI measures the change in
prices paid by consumers for goods and services. CPI
dropped 0.1% in December, the first decline since March.
It comes amid a plunge in gasoline prices. The adjusted
decline in the “All Items Index” was caused by a sharp
decrease in the gasoline index, which fell 7.5% in
December. This decline more than offset increases in
several indexes, including shelter, food, and other energy
components. Natural gas and electricity increased. (BLS,
January 11, 2019)
Conference Board Consumer Confidence Index: The
Conference Board said its index of U.S. consumer
confidence rose to 131.4 in February from 121.7 in
January. https://www.conference-
board.org/data/ConsumerConfidence.cfm
Personal Income: Increased $179.0 billion (1.0%) in
December. Disposable personal income increased $173.1
billion (1.1%), and personal consumption expenditures
decreased $76.6 billion (-0.5%). (BEA, March 1, 2019)
United State Conference of Mayors Metro Economies
Update: With fiscal stimulus still boosting economic
growth, plus solid gains in income, fourth-quarter GDP
growth should register 2.8%, bringing overall 2018
growth to 3.1%. Slowing global growth, a strong dollar,
fading fiscal stimulus, tightening monetary policy, weaker
stock prices, the effects of recent tariffs, and approaching
capacity constraints point to a material slowdown in the
pace of US growth this year. Project GDP growth of 2.1%
(fourth quarter over fourth quarter) across 2019.
http://www.usmayors.org/wp-
content/uploads/2019/02/Metro-Economies-Update.pdf
U.S. Tax Revenue: Federal tax revenue declined 0.4% in
2018, the first full calendar year under the new tax law,
despite robust economic growth and the lowest
unemployment rate in nearly five decades.
Household Net Worth: Total net worth of U.S.
households dropped during 4Q2018 by 3.5%. It is the
largest drop since 4Q2008. (WSJ, March 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.
Attachment C
ECONOMIC NEWS & TRENDS March 11, 2019
3 www.avenuinsights.com
Services Revenue
Services Sector Revenue for 3Q2018 Total Revenue: An
increase of 1.9% from 2Q2018 and up 6.3% from 3Q2017.
Personal Consumption Expenditures: Up 2.1% from
3Q2017. Information Sector: Up 1.9% from 2Q2018 and
up 8.4% from 3Q2017. Transportation/ Warehousing:
Up 1.1% from 1Q2018 and up 6.3% from 3Q2017.
Utilities: Increase of 15% from 2Q2018 and up 3.0% from
the 3Q2017. Passenger Car Leasing: Increase of 13%
from 2Q2018. Real Estate, Rental, and Leasing: Increase
of 3.2% from 2Q2018 and up 7.4% from 3Q2017.
Professional, Scientific, and Technical Services: Increase
of 1.2% from 2Q2018 and up 6.4% from 3Q2017.
Accommodations for 3Q2018 from 2Q2018: RV Parks
(24%); Rooming and Boarding Houses (43.2%). Arts and
Entertainment: Increase of 7.5% from 2Q2018 and up
4.1% from 3Q2017. Personal Services: Sep 2017 to Sep
2018 (2.6%); Legal Services (4.6%); Financial Services
(5.5%). https://www.bls.gov/opub/ted/2019/consumer-
price-index-2018-in-review.htm
Consumer Finances / Federal Reserve Survey:
The Federal Reserve Board in March will begin 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 collected will
provide a representative 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
Consumer Spending, Debt and Borrowing
Quarterly Report on Household Debt and Credit:
Reveals that 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: shown on consumer credit reports on
December 31 stood at $9.1 trillion, 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. Consumer spending has
increased 2.7% on average in the four quarters through
September. See
https://www.treasurydirect.gov/govt/reports/pd/pd_deb
ttothepenny.htm (Federal Reserve, January 8, 2019)
Interest Rates – What’s Ahead: The Federal Reserve
opted not to raise interest rates during its January policy
meeting and pledged that future moves will be done
patiently and with an eye toward how economic
conditions unfold.
Risk of Recession
Risk of Recession: Economists surveyed by The WSJ see a
growing risk of recession in the U.S. On average,
economists surveyed as part of a monthly poll conducted
by the newspaper said there was a 25% chance of a
recession in the next year, the highest level since October
2011. The probability was just 13% a year ago.
Forecasters are even more concerned about the outlook
for 2020. More than half of the economists, 56.6%, said
they expected a recession to start in 2020, a presidential
election year, while another 26.4% of those surveyed
expect a recession in 2021. Survey:
https://www.wsj.com/graphics/econsurvey/ (WSJ,
January 10, 2019)
Attachment C
ECONOMIC NEWS & TRENDS March 11, 2019
4 www.avenuinsights.com
Forecasts
GDP Growth Forecast: 2.5% in 2019. Down from 2.9% in
2018. Interest Rates: 10-year T notes ending 2019 at 3%,
up from 2.7% at the end of 2018. Inflation: 2.3% at end
of 2019, up from 1.9% at end of 2018. Unemployment:
Expected to be 3.4% by the end of 2019, down from 3.7%
at end of 2018. Crude Oil: Trading at $65 to $70 per
barrel in March. (Kiplinger, February 1, 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. Strong demand
means hotels will drive a hard bargain with businesses.
Occupancy rates are sky-high. Room rates will increase
by 3% over last year.
Lower Tax Refunds: 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.
Folks often use tax refunds for 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
Unemployment: The U.S. unemployment rate rose 0.2
percentage point to 3.9% in December before increasing
0.1 percentage point to 4.0% in January.
(DOF, February 2109).
Strong Job Market: Average monthly job growth is
forecast to slow from over 200,000 in 2018 to about
160,000 in 2019 (JP Morgan); this still enough to keep
pushing down the unemployment rate (JP Morgan).
Manufacturing
Manufactured Goods: New orders in December
increased by 1.2%. This is up for two consecutive
months. This is largely driven by commercial aircraft and
parts orders, and orders for vehicles and vehicle parts.
December Shipments: Up four of the last five months,
increasing 0.8%. This followed a 1.0 % November
decrease. (Census, February 21, 2019)
U.S. Residential Sales
National New Home Sales: Sales of previously owned
homes fell in January by 1.2% from December. January is
the third declining month and December 2018 was the
lowest since November 2015. Compared with an earlier
year, sales in January declined 8.5%. Inventories rose
3.9% in January. (NAR, WSJ February 2019)
Attachment C
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5 www.avenuinsights.com
PART 2: U.S. AND CHINA TARIFF /
IMPACT ON THE U.S. AND CALIFORNIA ECONOMIES
At the time of print, reports indicate the U.S. and China
are close to a deal that would roll back tariffs on both
sides. Significant details remain unsettled and the deal
is still being discussed but so far, the two sides have
agreed on a pact that would largely require Beijing to
make big purchases of American agricultural and energy
goods and to lower some barriers that prevent American
companies from operating in China. In return, the United
States would most likely drop its tariffs on at least $200
billion of the $250 billion worth of Chinese imports
currently subject to American levies.
The WSJ on February 20, 2019 reported that the
President gave his firmest indication yet that the U.S. may
not increase tariffs on Chinese goods on March 1 despite
from statements by his trade official that the U.S. should
stick to a firm deadline.
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
U.S. International Trade in Goods and Services,
December 2018 and the 2018 Year: Exports were $205.1
billion, $3.9 billion less than November exports.
December imports were $264.9 billion, $5.5 billion more
than November imports. The December increase in the
goods and services deficit reflected an increase in the
goods deficit of $9.0 billion to $81.5 billion and a
decrease in the services surplus of $0.5 billion to $21.8
billion. For 2018: The goods and services deficit
increased $68.8 billion, or 12.5% percent, from 2017.
Exports increased $148.9 billion or 6.3%. Imports
increased $217.7 billion or 7.5%. (BEA, March 5, 2019)
PART 3: WAYFAIR IMPLEMENTATION / E-COMMERCE
The U.S. Supreme Court's June 2018 ruling in Wayfair v.
South Dakota allows states more authority to require out-
of-state sellers to collect use tax. Previously, California
individuals were responsible for reporting and paying use
tax on out-of-state purchases. The California Department
of Tax and Fee Administration announced that it will
require out-of-state retailers to collect and remit use tax
beginning on April 1, 2019 if in the preceding or current
calendar year their sales into California exceed $100,000,
or 200 or more separate transactions.
AB 147 (Burke) defines “doing business in California” for
the purposes of collecting sales and use taxes as having
$500,000 in cumulative sales or deliveries into California
in the preceding 12 months; this is different than the
$100,000 or 200 separate transaction standard used in
South Dakota and replicated in proposed CDTFA
implementation regulations. As recently amended the bill
would authorize the CDTFA to grant relief for interest and
penalties imposed on use tax liabilities if specified
conditions are met. Beginning October 1, 2019, the bill
defines “marketplace facilitators” as the seller and
retailer for each sale facilitated through its marketplace,
thus, responsible for collecting and remitting sales and
use tax for each transaction. To determine cumulative
sales in California, a facilitator must include sales made
on its own behalf and those sales facilitated on behalf
of marketplace sellers.
Revenue Impact: According to an Assembly Committee
analysis, the CDTFA estimates that this bill's marketplace
facilitator provisions will result in state and local revenue
gains of $309 million in FY 2019-20 and $476 million in FY
2020-21. CDTFA estimates that this bill's threshold
increase provisions will result in state and local revenue
losses of $12 million in FY 2019-20 and $14 million in FY
2020-21.
Attachment C
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6 www.avenuinsights.com
E-Commerce as a Percent of Total U.S. Sales (3Q2018):
9.8% in 3Q2018. 9.6% in 2Q2018. 9.4% in 1Q2018. 9.1%
in 4Q4017. 3Q2018 e-commerce estimate increased
14.5% from 3Q2017 while total retail sales increased
5.3% in the same period.
PART 4: CALIFORNIA ECONOMIC INDICATORS / INFLUENCES
California Revenues for December 2018: Total revenues
of $18.79 billion in January were lower than estimates in
the governor’s 2019-20 fiscal year budget proposal by
$1.81 billion (8.8 %) but higher than projections in the FY
2018-19 Budget Act by $1.21 billion (6.9 %). In the fiscal
year to date, state revenues are just 0.2 % lower than the
same time last year. Sales tax and corporation tax, two of
the state’s “big three” revenue sources came in higher
than assumed in last month’s proposed budget. For
January, personal income tax (PIT) receipts of $16.36
billion were $2.53 billion (13.4 %) less than the DOF
forecasted last month but $403.6 million (2.5 %) higher
than assumed in the budget enacted last June. PIT
revenue was still 4.8 % higher than in January 2018. Sales
tax receipts of $1.59 billion for January were $602.8
million higher than anticipated in the proposed FY 2019-
20 budget and $647.4 million higher than in the FY 2018-
19 Budget Act. Last month’s corporation taxes were 9.0
% higher than estimates in the FY 2019-20 budget
proposal and 12.0 % higher than in the enacted FY 2018-
19 budget. (State Controller, February 2019)
California CPI: San Francisco Area (Up 0.1% over the past
two months ending in December 2018; up 4.5% from a
year ago) (BLS, December 2018); West Region (Down
0.2% in December 2018; up 3.1% from a year ago). The
December decrease was influenced by lower prices for
gasoline and apparel. (BLS, December 2018);
Los Angeles Area (Down 0.3% in November; up 3.6%
from a year ago) (BLS, November 2018).
Consumer Inflation for the U.S. and California: Rose
2.4% and 3.7%, respectively, in 2018 following 2.1% and
2.9% increases, respectively, in 2017. For California,
housing inflation was 4.1% in 2018. (DOF, February
2019)
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 2018 figure is 3.2%
lower than the 424,100 sold in 2017. 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.
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)
Real Estate Sales in California: Statewide sales of
existing, single-family homes in January 2019 totaled
357,730, down 3.9% from December and down 12.6%
from January 2018. The 30-year, fixed-mortgage interest
rate averaged 4.46% in January, up from 4.03% in January
2018 (Freddie Mac). (DOF, February 2019; CAR)
California Auto Sales in 2018 and 4Q2018: New vehicle
registrations in California remained above the 2-million-
unit mark in 2018. The state’s new vehicle market is
predicted to decline 2% from 2018 to 2019, which would
be the third consecutive annual decline. Although the
market is sliding lower, new vehicle registrations are well
above average, based on historical standards. 4Q2018:
The California new vehicle market fell by a slim 1%, an
improvement from the 3.5% drop in 3Q2018. (CNCDA,
February 2019)
Attachment C
ECONOMIC NEWS & TRENDS March 11, 2019
7 www.avenuinsights.com
California Building Permits: Totaled 96,000 units in
December, up 0.6% from the prior month, and down
22.9% from the previous year. Permits for single-family
housing fell 26.9% from November to 40,000 units, while
permits for multifamily housing increased 37.4% to
56,000 units. Total residential permits for 2018 averaged
114,000, only 500 units above the 2017 annual average,
an increase of 0.4%. (DOF, February 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. Retail sales of medicinal cannabis and
medicinal cannabis products are exempt from sales and
use taxes if the purchaser provides a valid Medical
Marijuana Identification Card and valid government-
issued identification card. 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/
California’s Labor Market: Unemployment rate
increased to 4.2% in December after remaining at a
historic low of 4.1% in September through November.
The labor force participation rate in both California and
the U.S. increased in December 2018, to 62.5% and 63.1%
respectively, their highest levels since September 2013.
(DOF, February 2019)
PART 5: RETAIL NEWS AND TRENDS / LEGISLATION
2018 Retail Results
4Q2018 Retail Sales: U.S. retail sales recorded their
biggest drop in over nine years in December; receipts fell
across the board, suggesting a sharp slowdown in
economic activity. 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)
Looking Back at 2018: Walmart Inc.: Wal-Mart Stores
Inc changed its name to Walmart Inc, signaling the
retailer is taking the online retail space seriously. Ace
Hardware: There were rumors that Kroger would
embark on a partnership with Ace Hardware for a store-
within-a-store concept. This did not happen. Ace has
more than 200 locations that are operated by grocery
retailers. Truck Drivers: There has been a shortfall of
qualified truck drivers to make deliveries; new federal
mandate requiring most truckers to use electronic logging
devices has not helped. Commuter E-Commerce: Mass
transit in certain parts of Canada is allowing commuters
to preorder groceries online for pick up during their next
day’s commute. Bring it Home: Home deliveries
exploded. Wag: Amazon’s private label dog food is
posing greater threat to pet market for both on-line and
in-store. Desserts: Healthy lifestyle desserts trended.
Straws: Consumers pushing retailers to eliminate single-
use plastics for the sake of the environment. Self-Driving
Cars: Walmart’s pilot program and others illustrate the
ways retailers are exploring the possibilities. Bots: Using
robots to measure and address the shelf-life of products.
(Supermarket News, December 2018)
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)
Attachment C
ECONOMIC NEWS & TRENDS March 11, 2019
8 www.avenuinsights.com
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 in a decade. The increase is from
grocery sales, online orders and holiday purchases
including toys.
Amazon Retail Updates
Selling on Amazon: Amazon held invitation-only
meetings designed to convince people who sell their
wares on Amazon's Marketplace to pay up to $5,000 a
month to join a support program that would get them an
Amazon account representative. Marketplace accounts
for about half of the company's total unit sales. (Business
Insider, January 2018)
Valentine’s Day: The average spent on the holiday
keeps rising. This year, folks plan to spend $162, versus
$102 in 2009. About half of folks age 18 to 34 will take
part this year, versus 72% in 2009.
Household Staples Increase: Will offset higher
commodity costs and boost profits. This is in response to
higher costs of raw materials and transportation and well
as unfavorable foreign-currency swings. (WSJ)
Warehouse News / Legislation
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)
Warehouse Space: The availability of space fell to 7% in
4Q2018, the lowest point since 2000. (CBRE Group) .
Retailer warehouses are getting taller and sophisticated.
Property owners are competing for industrial space closer
to urban consumers, where companies can sort packages
and deliver them more rapidly. (WSJ)
2019 Proposed California Legislation:
Local Government: Economic Incentives: Proposed SB
531 (Glazer) includes intent language. During a
conversation with the author’s office, MuniServices was
told that SB 531 will be amended with language that
addresses the League of California Cities City Managers
Sales Tax Working Group recommendations for
addressing economic incentives, prospectively. As
currently drafted the bill states the Legislature’s intent to
enact legislation that would prohibit a local government
from agreeing to offer economic incentives in an amount
measured by local sales tax revenue to a private
corporation in exchange for the corporation locating
within the local government’s jurisdiction.
SCA 20 from 2018 proposed to shift the allocation of sales
and use tax for all online purchases from point-of-sale
(POS) to point-of-destination. While the current system
allows jurisdictions that house distribution centers and
warehouses that fulfill internet sales to receive sales and
use tax allocations, those jurisdictions would no longer
capture these revenues under SCA 20, and cities and
counties with residents that make purchases online
would instead receive increased revenues.
Local Economic Development Subsidies: AB 485
(Medina) would require a local agency to provide
specified information to the public before approving an
economic development subsidy for a warehouse
distribution center and to hold hearings and report on
those subsidies. The bill requires a warehouse
distribution center to provide a local agency with any
information necessary to comply with these provisions.
Prohibits a local agency from signing a nondisclosure
agreement regarding a warehouse distribution center as
part of negotiations or in the or in the contract for any
economic development subsidy. In 2018 Governor
Brown vetoed a related measure, AB 2853 (Medina).
Attachment C
ECONOMIC NEWS & TRENDS March 11, 2019
9 www.avenuinsights.com
MuniServices Discussion Documents for the City
Managers Sales Tax Working Group
https://www.avenuinsights.com/wp-
content/uploads/2018/08/MuniServices-l-Avenu-
Research-and-Analysis-City-Managers-Working-Group-
SCA-20-and-Destination-Sourcing-Revised-083018-Final-
PDF-v2.pdf
MuniServices Discussion Options for a Broader Approach
to Reform Included:
Modernize: Broaden sales tax to services and digital
downloads; increase flexibility of the regulations to meet
the challenges and changes of the future.
“Pooling”: End pooling of online retail sales, third party
vehicle sales made at DMV, and lower threshold to
$100,000 from $500,000 on out of state sales.
Destination Sourcing: Allocate local sales tax to the
destination of buyer for all on-line retail sales.
Exemptions: Remove as many of the existing exemptions
as politically and practically possible.
“Rebates” / Warehouse Distribution: Rebates/
Incentives: “Revisit” the intent of SB 533 from 2015 as
part of the overall SCA 20 and tax reform discussion and
whether the law is working for all local governments.
Pets
More than two-thirds of U.S. households own a pet, and
in 2018 spent an estimated $70 billion on pet food,
supplies, veterinary services, compared with $40 billion
from a decade ago. (American Pet Products Association)
Robots and Assistants
Robots for Inventory: Retailers that have been turning to
robots to handle inventory in warehouses are testing
whether machines can handle a new task: detecting
when store shelves need restocking. Voice Assistants:
U.S. consumers use voice assistants throughout the entire
shopping journey including research products (51%);
add to my shopping list (36%); track a package (30%);
make a purchase (22%); provide ratings or reviews (20%);
contact support (18%); and reorder items (17%).
Trends and Other News
10 Retail Trends to Watch for 2019: Sustainability; Store
concepts; Retail as a service to expand this year;
Retailers glean lessons from direct to consumer success
stories; Private label will grow online; Retail landscape
will be rearranged; Bankruptcies expected to slow;
Loyalty gets more relevant; Sho pping via tech gets
more sophisticated; The cost of e -commerce will force
a reckoning. (Retail Dive)
Attachment C
ECONOMIC NEWS & TRENDS March 11, 2019
10 www.avenuinsights.com
PART 6: AUTO SALES AND GASOLINE
National Trends: The industry sold about 17.3 million
vehicles in 2018, up less than 1% from a year earlier.
Auto executives remain concerned of a market slowdown
in the U.S. as rising interest rates on car loans and new
price increases will make it more difficult for buyers to
afford cars. Sales of all sedans under $20,000, including
compact cars, were down 29% for the same year-over-
year period. (Edmunds.com). There is also a robust
second-hand market. (WSJ, January 4, 2019)
California Auto Sales in 2018 and 4Q2018: New vehicle
registrations in California remained above the 2-million-
unit mark in 2018. The state’s new vehicle market is
predicted to decline 2% from 2018 to 2019, which would
be the third consecutive annual decline. Although the
market is sliding lower, new vehicle registrations are well
above average, based on historical standards. 4Q2018:
The California new vehicle market fell by a slim 1%, an
improvement from the 3.5% drop in 3Q2018. (CNCDA,
February 2019)
California and National Gas Influences: Price as of
February 12, 2019. California’s average is 3.269 (the
average a year ago was $3.342). Cities in California are
expected to see the highest prices in 2019, with daily
averages totaling $4.10 in Sacramento, $4.15 in Los
Angeles, and $4.20 in San Francisco. The national
average on January 13, 2019 is $2.245 per gallon (was at
$2.765 per gallon on November 4, 2018). Last year's
lower pump prices were linked to a decision by the
Organization of the Petroleum Exporting Countries
(OPEC) to extend production cuts. Due to concerns about
the economy and a glut of petroleum production,
December's gas prices were the lowest of the year with
nearly 20% of states enjoying prices below $2 per gallon.
(American Automobile Association and GasBuddy).
Oil Prices: The U.S. in 2018 became the world’s top oil
producer, regaining a spot it ceded 45 year ago; the new
year kicks off with a new agreement between OPEC and
its partners to curtail production. Baring a severe slump
in global growth, the market should reach equilibrium.
(WSJ, January 2, 2019)
Tesla: To sell only online. Will begin shutting stores.
Tesla will bring down the price of the Model 3 from its
current $42,900 base sticker price to the long-promised
$35,000 threshold to reach mainstream buyers. Tesla
customers in recent months have been venting on social
media about trouble getting repair appointments.
PART 7: RESTAURANT AND GROCERY TRENDS
The CPI measures the change in prices paid by consumers
for goods and services. Dining and Food: Food at
Home: Dec 2018 (0.3%); Nov 2018 (0.2%); Oct 2018 (-
0.2%); Food Away From Home: Dec 2018 (0.4%); Nov
2018 (0.3%); Oct 2018 (0.1%); Full Services Meals and
Snacks: Dec 2018 (0.5%); Nov 2018 (0.2%); Oct 2018
(0.2%); Mobile Vendors and Vending Machines: Dec
2018 (0.3%); Nov 2018 (0.5%); Oct 2018 (0.3%); Wine:
From Dec 2017 to Dec 2018 Wine at Home (1.1%); Wine
Away from Home: (2.6%).
Grocery Retailer Ranking: The top five are: Trader Joes,
Costco Wholesale, Amazon, H-E-B, Wegmans Food
Markets. Others, in decreasing order, are: Market Basket
, Sam’s Club, Sprouts, WinCo Foods, Walmart, Aldi,
Peapod, and The Fresh Market. (Retailer Preference
Index, January 2019)
Amazon Grocery Chain: The first will be in Los Angeles.
Additional talks are for stores in San Francisco, Seattle,
Chicago, Washington, D.C., and Philadelphia.
Pizza Vending Machines: French-made automated
machines can cook and dispense piping hot pizzas and are
now in 400 spots in Europe. A 10-inch pepperoni pizza
costs $8 and takes three minutes to bake. A machine
costs $59,000 and can pay for itself in 12-18 months.
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 spirts
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
ECONOMIC NEWS & TRENDS March 11, 2019
11 www.avenuinsights.com
PART 8: SELECTED RETAIL UPDATES
Sources: The Shelby Report; Plain Vanilla Shell, California
Employment Development Department - Period Covered:
November 1, 2018 to March 1, 2019
Apple: Apple and Amazon reached an agreement to
increase the amount and range of Apple products
Amazon sells on its site. Amazon will sell a wider variety
of iPhones, iPads. A contributing factor to the new
alliance is Amazon's decision to stop its third-party
merchants not authorized by Apple from offering the
companies’ products on the Amazon site.
Ace: 4Q2018 revenues up 5.7% from 4Q2017.
Albertsons: Merger with Rite Aid did not happen.
Amazon: Grocery grew 45% in 2018, yet that is less than
the nearly 60% growth in 2016-17. Top categories by
sales in 2018 were cold beverages / 35%; coffee / 40%;
snacks / 50%; and breakfast foods / 15%. Plans grocery
chain.
Bed Bath & Beyond: Expecting the retailer to make
changes; stores have been called messy.
Blue Apron: Entered into a partnership with Weight
Watchers.
Blue Diamond: Expanding California manufacturing plant
to Turlock. Chico’s: Set to close 250 stores within their
brand family in the U.S. as they pivot to omnichannel
strategy.
Burger King: Expanded deliveries.
Chick-fil-A: On track to become the third-largest chain in
the U.S., behind McDonalds and Starbucks.
Chipotle: Opens 2,500 restaurant; digital sales grow
42%.
Curry Up: Acquired Tava Kitchen.
Dollar Store: To close 390 Family Dollar stores.
FarmStead: San Francisco-based online grocer is
lowering prices and offering refill and save program.
Gelson’s: In-store wine bars debut ‘robot bartender.’
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. 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.
Gymboree: Reportedly planning to close all 900 stores.
IHOP: Now American’s largest casual dining chain.
JC Penny: Closing 27 stores.
Kmart: March closures in Auburn, Stockton, Santa Maria,
Burbank, and Apple Valley.
Kohls: Announced 4 non-California closures;
experienced decelerating same-store sales for the holiday
period.
Kroger’s: Plans to acquire private meal kit company,
Home Chef.
New Seasons Market: Increase starting pay for staff.
Payless: Files for bankruptcy; will close all of its North
American 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.
Samuel Jewelers: To close all its stores.
Sleep Outfitters: Files for bankruptcy.
Starbucks: Scales back plans for upscale shops to revive
sales. In January, reported sales at U.S. cafes boosted;
growth of 4% in the first quarter of its fiscal year.
Sears: Has been granted another lifeline, with
a bankruptcy judge approving the company’s $5.2 billion
sale to chairman and ex-CEO Eddie Lampert. The deal
would allow the department store chain to continue
operations at 425 stores and save the jobs of 45,000
employees. Mr. Lampert has a plan for Sears which
includes smaller stores and less apparel.
Tesla: To sell only online. Will begin shutting 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. Pressure from
consumer-product companies to cover rising costs for
packaging, ingredients and transportation has led
Amazon to start raise prices again.
EDD Warn Report:
https://www.edd.ca.gov/Jobs_and_Training/warn/WARN
_Report_for_7-1-2018_to_02-10-2019.pdf
Contact: Tracy Vesely, Director of Client Services /
Tracy.Vesely@avenuinsights.com
Attachment C