HomeMy WebLinkAboutStaff Report 11020
City of Palo Alto (ID # 11020)
City Council Staff Report
Report Type: Informational Report Meeting Date: 3/2/2020
City of Palo Alto Page 1
Summary Title: Sales Tax Digest Summary 2019 Q2
Title: City of Palo Alto Sales Tax Digest Summary For the Second (Calendar)
Quarter of 2019 (April - June 2019)
From: City Manager
Lead Department: Administrative Services
Informational Summary
The City received $8.7 million for the second quarter (calendar year) sales of 2019 which is $0.9
million (11.9 percent) higher than the same quarter in 2018. The following files, compiled by
the City’s sales tax consultant, MuniServices/Avenu, are attached for this informational report
for which no action is required.
Attachments:
• Attachment A: Avenu Sales Tax Digest Summary
• Attachment B: Economic Categories and Segments
• Attachment C: Avenu Economic News and Trends Report
City of Palo Alto
Sales Tax Digest Summary
Collections through September 2019
Sales through June 2019 (2019Q2)
www.avenuinsights.com (800) 800-8181 Page 1
% 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 28.8 / -0.3 27.6 / 3.8 25.5 / 2.5 27.0 / 5.1 28.4 / 0.3 28.6 / 4.0 27.6 / 8.8 30.1 / 3.8 28.0 / 1.4
Food Products 16.6 / 1.0 23.0 / 6.6 24.6 / 6.9 18.1 / 4.5 17.5 / 7.0 24.7 / 6.3 19.7 / 9.5 16.8 / -12.8 35.8 / 14.6
Construction 1.3 / -3.5 10.3 / 2.5 10.4 / 1.8 12.8 / -0.7 12.6 / 3.2 9.2 / 4.5 11.6 / 3.4 16.6 / -4.7 9.1 / 14.0
Business to Business 26.5 / 14.4 12.6 / -11.3 14.9 / -11.3 11.7 / -4.3 13.2 / 9.0 11.9 / -11.8 11.6 / -15.4 8.2 / -7.8 3.5 / -26.8
Misc/Other 26.7 / 25.9 23.8 / -1.1 24.6 / 8.2 30.4 / 4.9 28.4 / 4.7 25.6 / 6.1 29.5 / 3.8 28.4 / -17.4 23.6 / 1.4
Total 100.0 / 9.7 100.0 / 2.5 100.0 / 2.4 100.0 / 3.0 100.0 / 4.1 100.0 / 2.9 100.0 / 3.4 100.0 / -8.1 100.0 / 5.3
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 Restaurants Department
Stores Restaurants Restaurants Department
Stores Restaurants
% of Total / % Change 20.1 / 41.8 16.8 / 8.9 18.3 / 9.4 12.6 / 7.3 12.9 / 7.8 18.6 / 8.6 12.7 / 10.0 12.2 / 15.2 25.9 / 17.6
2nd Largest Segment Restaurants Auto Sales -
New
Auto Sales -
New
Auto Sales -
New Restaurants Auto Sales -
New
Auto Sales -
New
Auto Sales -
New
Auto Sales -
New
% of Total / % Change 16.8 / 1.8 11.7 / 9.7 12.0 / 12.6 11.9 / 3.0 11.8 / 11.1 12.0 / 11.3 10.9 / 5.7 11.2 / -13.1 11.9 / 2.6
3rd Largest Segment Leasing Department
Stores
Department
Stores
Department
Stores
Auto Sales -
New
Department
Stores
Department
Stores Restaurants Miscellaneous
Retail Stores
% of Total / % Change 7.9 / -16.2 9.3 / 5.3 7.4 / 3.6 10.9 / 6.8 10.9 / 6.4 9.0 / 5.0 10.6 / 9.7 10.1 / 15.4 10.1 / 6.7
*** Not specified to maintain confidentiality of tax information
CITY OF PALO ALTO
BENCHMARK YEAR 2019Q2 COMPARED TO BENCHMARK YEAR 2018Q2
ECONOMIC CATEGORY ANALYSIS FOR YEAR ENDED 2nd Quarter 2019
ECONOMIC SEGMENT ANALYSIS FOR YEAR ENDED 2nd Quarter 2019
California Overview
The percent change in cash receipts from the prior year was 16.2% statewide, 16.5% in Northern
California and 16.0% 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 2nd
Quarter 2019 by 20.3% statewide, 18.9% in Southern California and 22.0% in Northern California.
City of Palo Alto
For the year ended 2nd Quarter 2019, sales tax cash receipts for the City increased by 21.4.% from the
prior year. On a quarterly basis, sales tax revenues increased by 11.9% from 2nd Quarter 2018 to 2nd
Quarter 2019. 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 9.7% for the year ended 2nd Quarter 2019 from the prior year. On
a quarterly basis, sales tax activity increased by 3.9% in 2nd Quarter 2019 compared to 2nd Quarter
2018.
Regional Overview
This seven-region comparison includes estimated payments and excludes net pools and adjustments.
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 2nd Quarter 2019: $36,089,829
*Benchmark year (BMY) is the sum of the current and 3 previous quarters (2019Q2 BMY is sum of 2019 Q1, 2018 Q4, Q3, Q2)
Restaurants
11.8%
Apparel Stores
5.5%
Department Stores
5.2%
Miscellaneous Retail
4.4%Business Services
1.6%
Service Stations
2.0%
All Other
50.1%
Net Pools & Adjustments
19.5%
ATTACHMENT A
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 3
$-
$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 2019Q2 Benchmark Year 2018Q2
Anderson Honda Lucile Packard Children's Hosp Stanford Outpatient Clinic Pharmacy
Apple Stores Macy's Department Store Tencent
Audi Palo Alto Magnussen's Toyota Of Palo Alto Tesla
Bloomingdale's Mclaren San Francisco Tesla Lease Trust
Bon Appetit Management Co.Neiman Marcus Department Store Tiffany & Company
Hermes Nest Labs Urban Outfitters
Houzz Shop Nordstrom Department Store Varian Medical Systems
Hp Enterprise Services Shell Service Stations Volvo Cars Palo Alto
Integrated Archive Systems
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 2nd Quarter 2019. The Top 25 Sales/Use Tax contributors generate
54.7% of Palo Alto’s total sales and use tax revenue.
Sales Tax from Largest Non-Confidential Economic Segments
ATTACHMENT A
City of Palo Alto
www.avenuinsights.com (800) 800-8181 Page 4
Historical Analysis by Calendar Quarter
Economic Category % 2019Q2 2019Q1 2018Q4 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4
Business To Business 21.3% 2,047,219 2,198,385 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
General Retail 22.7% 1,981,968 1,843,013 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
Misc/Other 20.3% 1,776,358 1,304,318 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
Food Products 14.3% 1,252,840 1,160,612 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
Net Pools & Adjustments 21.4% 1,876,055 1,214,253 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
Total 100.0% 8,746,661 7,715,155 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
Economic Segments % 2019Q2 2019Q1 2018Q4 2018Q3 2018Q2 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4
Miscellaneous/Other 48.6% 4,251,453 4,051,654 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
Restaurants 11.8% 1,035,216 1,045,521 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
Apparel Stores 4.6% 404,627 408,968 405,979 361,406 439,601 412,952 701,369 419,279 452,135 435,757 1,002,389
Department Stores 4.1% 356,943 356,943 599,795 475,142 495,267 471,419 642,666 458,066 510,561 392,565 641,541
Miscellaneous Retail 3.7% 324,279 326,994 596,192 448,510 451,110 390,780 585,892 440,005 449,402 372,033 553,250
Business Services 2.3% 198,913 181,454 173,916 148,751 154,446 163,072 148,906 147,499 159,371 119,552 130,396
Service Stations 1.8% 159,032 159,032 110,015 98,072 97,870 117,783 128,671 117,256 112,566 131,676 145,179
Food Markets 1.2% 105,601 95,783 175,994 43,961 57,433 155,193 157,861 173,439 75,722 43,548 102,095
Recreation Products 0.4% 34,543 34,543 76,617 90,235 54,661 60,326 82,100 56,998 76,514 61,392 61,328
Net Pools & Adjustments 21.4% 1,876,055 1,054,264 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
Total 100.0% 8,746,661 7,715,155 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
*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 2018Q2 to 2019Q2
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Campbell -3.9% 6.7% 0.2% 1.1% 3.2% 2,578,752 2,539,508 1.5%Electronic Equipment Restaurants Furniture/Appliance Office Equipment
Cupertino -2.5% 0.1% 2.5% 10.4% 0.3% 6,053,958 5,623,788 7.6%Office Equipment Bldg.Matls-Retail I.T. Infrastructure Furniture/Appliance
Gilroy 1.9% 0.6% 6.8% 6.9% 4.6% 4,114,200 3,976,051 3.5%Auto Sales - New Department Stores Misc. Vehicle Sales Heavy Industry
Los Altos -21.3% 0.8% 23.8% 89.1% -2.2% 630,004 630,814 -0.1%Business Services Food Markets Miscellaneous Retail Furniture/Appliance
Los Gatos 5.1% 1.3% -14.9% -4.7% 22.2% 1,728,207 1,593,469 8.5%Auto Sales - New Miscellaneous Retail Bldg.Matls-Whsle Business Services
Milpitas 2.1% 2.6% 17.6% 35.5% -2.5% 5,862,855 5,220,223 12.3%Office Equipment Bldg.Matls-Whsle Heavy Industry I.T. Infrastructure
Morgan Hill 0.7% 5.1% -9.5% -43.4% 16.2% 2,228,860 2,248,394 -0.9%Auto Sales - New Light Industry Heavy Industry Electronic Equipment
Mountain View 54.4% 10.5% 26.4% 3.2% 2.0% 5,725,691 4,822,532 18.7%Miscellaneous Retail Restaurants Office Equipment Food Markets
Palo Alto -5.7% 0.8% 13.4% 6.9% 15.8% 7,069,822 6,804,507 3.9%Auto Sales - New Office Equipment Leasing I.T. Infrastructure
San Jose -7.5% 2.2% -3.2% -8.5% -3.1% 41,238,463 43,198,005 -4.5%Auto Sales - New I.T. Infrastructure Department Stores Green Energy
Santa Clara 29.0% 4.3% -8.5% -5.6% -3.4% 12,059,317 12,016,551 0.4%Furniture/Appliance Office Equipment Light Industry Auto Sales - New
County of Santa Clara -3.2% 0.9% -3.3% -58.9% -14.9% 1,180,339 1,447,962 -18.5%Health & Government Food Processing Eqp Miscellaneous Other Light Industry
Saratoga -2.6% 7.6% -28.1% -22.4% -9.1% 241,865 242,457 -0.2%Food Processing Eqp Restaurants Electronic Equipment Bldg.Matls-Whsle
Sunnyvale -12.0% -1.4% -10.3% 5.2% 12.9% 6,312,122 6,209,109 1.7%Light Industry Auto Sales - New Department Stores 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
November 11, 2019
This edition reports on current Federal and State economic data,
studies, and research. We encourage you to share this non-confidential
report with others in our agency. Please contact your Client Success
Manager to discuss specific regional trends.
CONTENTS
Part 1: National Economic Indicators (Page 2 to 4)
Part 2: California’s Economy / Regional Summaries (Pages 4 to 5)
Part 3: Retail / E-Commerce (Pages 5 to 6)
Part 4: Auto Sales and Gasoline (Page 7)
Part 5: Grocery and Restaurant Trends (Page 7)
Part 6: Selected Retailer Updates (Page 8)
ATTACHMENT C
ECONOMIC NEWS & TRENDS November 11, 2019
2 www.avenuinsights.com
PART 1: NATIONAL ECONOMIC INDICATORS / INFLUENCES
Gross Domestic Product (GDP) / 3Q2019: Up 1.9% in
3Q2019; was 2% for 2Q2019.
Consumer Spending in 3Q2019: Increased in both goods
(recreational goods and vehicles as well as food and
beverages) and in services (led by health care and
housing and utilities).
Prices of Goods and Services: Increased 1.4% in 3Q2019,
increased 2.2% in 2Q2019.
Food Prices: Decreased 0.6% in 3Q2019.
Energy: Decreased 8% in 3Q2019.
Government Spending: The increase in government
spending reflected increases in both federal and state
and local government spending.
Business Investment: The decrease in business
investment reflected decreases in structures (led by
mining exploration, shafts, and wells) and in equipment
(notably information processing equipment and
transportation equipment).
(https://www.bea.gov/data/gdp/gross-domestic-product;
next release is November 27, 2019)
Contribution to GDP by Industry for 2Q2019
Retail Trade: Increased 0.2% in 2Q2019, after increasing
8.8%. Reasons for Deceleration: Attributed to a
slowdown in other retail, which includes gasoline stations
as well as building material and garden equipment and
supplies dealers. Utilities: Increased 18.1% in 2Q2019,
after decreasing 3.5% in 1Q2019.
(https://www.bea.gov/news/2019/gross-domestic-
product-industry-second-quarter-2019, October 29, 2019;
next release is January 9, 2020)
Consumer Price Index / Spending - September 2019
CPI for All Urban Consumers: Unchanged in September
after rising 0.1% in August. All Items Index: Over the
last 12 months ending in September, increased 1.7%.
Energy: Declined 1.4% in September, its fourth decline in
the last 5 months. Gasoline: Declined 0.9% in
September. Lodging Away From Home: Increased 2.1%
in September after falling 2.1% in August. Increases for
September: Shelter, rent (by 0.4%). Declines for
September: Used cars and trucks (by 1.6%), new
vehicles (by 0.1%), apparel (by 0.4%) after rising in each
of the prior 3 months, communication, alcoholic
beverages and personal care.
https://www.bls.gov/opub/ted/2019/cpi-increased-1-
point-7-percent-for-year-ending-september-2019.htm,
October 10, 2019; October 2019 data release is
November 13, 2019.
Recession: The periodic skittishness in stock and bond
markets have produced alarmism among certain analysts,
but the current fundamentals do not appear to indicate a
looming recession. While the current slowing in the
economy will negatively impact fundamentals in the
coming quarters, a full recession likely will require a more
dramatic, as yet unforeseen, shock to the economy.
CPI West Region: The West Region covered is comprised
of the following states: Alaska, Arizona, California,
Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico,
Oregon, Utah, Washington, and Wyoming. West
Region / September 2019: Up 0.3% since August 2019;
up 2.6% from a year ago. Increase was influenced by
higher shelter and apparel prices. The index for all items
less food and energy rose 3.0% over the year. Food:
September 2019 increased 2.7% since September of
2018. Food away from home increased 1.7% since
September 2018. Energy: September 2019 increased
1.1% since September of 2018. Household Furnishings:
Energy: September 2019 increased 1.1% since
September of 2018. Housing: September 2019 increased
4.3% since September of 2018. Rent of Primary
Residence: September 2019 increased 4.8% since
September of 2018. Fuel and Utilities: September
2019 increased 2.2% since September of 2018.
Apparel: September 2019 decreased 0.7% since
September of 2018. Increased 4.3% since August 2019.
New Cars and Trucks: September 2019 increased 1.1%
since September 2018. Used Cars and Trucks:
September 2019 increased 2.2% since September of
2018. Decreased 3.9% since August 2019. Gasoline:
September 2019 decreased 2.2% since September of
2018. Services: September 2019 increased 3.4% since
September of 2018.
https://www.bls.gov/regions/west/news-
release/consumerpriceindex_west.htm
October 10, 2019; October 2019 Data Release is
November 13, 2019)
ATTACHMENT C
ECONOMIC NEWS & TRENDS November 11, 2019
3 www.avenuinsights.com
Consumer Spending
U.S. Consumer Spending: September 2019, increased by
0.2%; August 2019, increased by 0.2%; July 2019,
increased 0.5% and June 2019, increased 0.3%.
(https://www.bea.gov/news/2019/personal-income-and-
outlays-august-2019, September 27, 2019)
U.S. Consumer Debt: In August 2019 rose 5.2%;
revolving credit decreased at an annual rate of 2.2% and
non-revolving credit (mostly education and auto loans)
increased 7.75% in August after a 5.4% gain in July.
(https://www.federalreserve.gov/releases/g19/current/,
October 7, 2019)
Consumer Confidence Index for October 2019: Declined
in October (125.9), following a decline in September
(126.3). The latest report notes that “consumers unlikely
to curtail holiday spending.” (https://www.conference-
board, October 29, 2019)
Interest Rates: The Federal Reserve cut interest rates by
a quarter percentage point late October in an effort to
support an economy that continues to tap the brakes.
(NPR, October 30, 2019)
E-Commerce and Retail Sales
Total Retail Sales in 2Q2019: Increased 1.8% from
1Q2018, while e-commerce increased 4.2% from
1Q2019.
E-Commerce Year Over Year Estimate for 2Q2019:
Increased 13.3% from 2Q2018, while total retail sales
increased 3.2% from 2Q2019.
E-Commerce as Part of Total Sales in 2Q2019:
Accounted for 10.7% of total sales; was 10.5% in
1Q2019; was 10.1% in 4Q2018; 10% in 3Q2018;
9.8% in 2Q2018.
Total Sales in 2018: Increased 4.8% from 2017. E-
commerce sales in 2018 is 9.7% of total sales; 2017 is
8.9%.
(https://www.census.gov/retail/mrts/www/data/pdf/ec_
current.pdf, August 19, 2019; Next release is November
19, 2019)
Retail and Food Service for September 2019 Decreased
A decrease in September from August of 0.3%, but 4.1%
above September 2018. Total sales for the July 2019
through September 2019 period were up 4.0% from the
same period a year ago. The July 2019 to August 2019
percent change was revised from up 0.4% to up 0.6%.
Retail trade sales were down 0.3% from August 2019, but
4.0% above last year. Non-store retailers were up 12.9%
from September 2018, and miscellaneous stores were up
9.3% from last year. Note these are early estimates.
(https://www.census.gov/retail/marts/www/marts_curre
nt.pdf October 16, 2019)
Services Revenue
Services Sector Revenue for 2Q2019: An increase of
1.3% from 1Q2018 and up 5.3% from 2Q2018.
Information Sector: An increase of 1.8% from
1Q2019 and up 1.8% from 1Q2019.
Transportation/ Warehousing: Increase of 0.3%
from 1Q2019 and up 2.0% from 2Q2018.
Utilities: Decrease of 1.5% from 1Q2019 and down
1.9% from 2Q2018.
Real Estate, Rental, and Leasing: Increase of 10%
from 1Q2019 and up 6.6% from 2Q2018.
Professional, Scientific, and Technical Services:
Increase 1.8% from 1Q2019; up 4.2% from 2Q2018.
Accommodations: An increase of 10.3% from
1Q2019 and up 1.2% from 2Q2018.
Arts and Entertainment: An increase of 12.4% from
1Q2019 and up 6.5% from 2Q2018.
Other Services: An increase of 2.1% from 1Q2019
and up 9.5% from 2Q2018.
(https://www.census.gov/services/qss/qss-current.pdf,
September 6, 2018; Next release is November 19, 2019)
ATTACHMENT C
ECONOMIC NEWS & TRENDS November 11, 2019
4 www.avenuinsights.com
Forecasts
Expects the national economy to slow to 0.4% in the
second half of 2020, before rebounding to 2.1% in 2021.
Given the slow growth rate nationally and the weakness
in the housing market, expects California's
unemployment rate to rise to an average of 5.1% in
4Q2020. For the entire years of 2020 and 2021, the
unemployment rate in the state is expected to average
4.6%. https://www.anderson.ucla.edu/centers/ucla-
anderson-forecast/september-2019-economic-outlook
GDP Growth Forecast: 2.3% in 2019. Down from 2.9% in
2018. Will soften in 2020, an election year to 1.8%.
Retail Sales: Growing 4.3% in 2019 excluding gas and
autos. Interest Rates: 10-year T notes staying below 2%
range until trade war ends. Inflation: 2.1% at end of
2019 as new tariffs affect consumer goods. Crude Oil:
Trading at $50 to $55 per barrel in December. (Kiplinger,
October 25, 2019.
International Trade / Imports and Exports
International Trade Deficit: Goods and Services Deficit:
The deficit increased by 4.7% in September 2019.
Exports: Increased -0.9%: September exports were
$206 billion, $1.8 billion less that August exports.
Specific Goods: Automotive vehicles, parts, and
engines decreased $1.0 billion. Passenger cars
decreased $0.3 billion. Trucks, buses, and special
purpose vehicles decreased $0.3 billion.
Imports: Increased -1.7%: September imports were
$258.4 billion, $4.4 billion less than August imports.
Specific Goods: Consumer goods decreased $2.5
billion. Cell phones and other household goods
decreased $0.8 billion. Toys, games, and sporting
goods decreased $0.6 billion. Automotive vehicles,
parts, and engines decreased $1.1 billion. Trucks,
buses, and special purpose vehicles decreased $0.4
billion. Automotive parts and accessories decreased
$0.3 billion. Passenger cars decreased $0.3 billion.
(https://www.census.gov/foreign-trade/Press-
Release/current_press_release/ft900.pdf, November 5,
2019)
Employment and Job Market
Jobs and Unemployment: The unemployment rate, at
3.6%, was little changed in October and the U.S. economy
added 128,000 jobs. Notable Gains: Food services and
drinking places, social assistance, and financial activities.
Within manufacturing, employment in motor vehicles
and parts decreased due to strike activity. Federal
government employment was down, reflecting a drop in
the number of temporary jobs for the 2020 Census.
(https://www.bls.gov/news.release/empsit.nr0.htm,
November 1, 2019)
Manufacturing
New Orders of Durable Goods: September decreased
1.1%; follows three consecutive monthly increases,
followed a 0.3% August increase.
Computers and Electronic Products / September 2018
and 2019: Shipments up by 4.1% Computers and
Related Products/ September 2018 and 2019: New
orders down by 6.1%. Capital Goods (Non-Defense)/
September 2018 and 2019: Down by 3.9%
(https://www.census.gov/manufacturing/m3/adv/pdf/du
rgd.pdf, October 24, 2019)
U.S. Residential Sales and Housing
National New Home Sales in September: Total existing-
home sales decreased 2.2%. Overall sales up 3.9% since
September 2018. Mortgage Rates: A 30-year, fixed-rate
mortgage decreased to 3.61% in September. All-Sales
Purchases: 17% of transactions in September, down
from 19% in August and 21% in September 2018. West
Results: Existing home sales declined 0.9% in September,
5.6% above a year ago. The median price in the West was
$403,600, up 4.5% from September 2018. (NAR, October
22, 2019)
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ECONOMIC NEWS & TRENDS November 11, 2019
5 www.avenuinsights.com
PART 2: CALIFORNIA ECONOMIC INDICATORS / INFLUENCES
California GDP for 2Q2019: 1.9%. California GDP for
4Q2018 to 1Q2019 is 2.7%; previous quarter results are
2.2%. (BEA, November 7, 2019)
Sales and Use Tax: For July to September 2019 (first
three months of the fiscal year) were $77 million below
forecast. Receipts for September were $52 million above
the month’s forecast of $2.098 billion. Personal Income
Tax: $420 million below forecast. Revenues for
September were $401 million below the month’s forecast
of $8.65 billion. Corporation Tax: July to September
2019 were $682 million above forecast. (DOF, October
2019)
California’s Labor Market: Unemployment: California’s
unemployment rate fell to a new record low of 4% in
September, while labor force participation rate held at
62%. Unemployment: The U.S. unemployment rate fell
to 3.5% in September, the lowest level since December
1969. Year-to-date, California’s unemployment rate is
now averaging 4.2%, unchanged from the same period
last year. For the U.S., year-to-date average
unemployment rate is 3.7%, down 0.2 percentage point
from last year’s year-to-date of 3.9%. (DOF, October
2019)
Real Estate Sales in California for September 2019:
Existing, single-family home sales totaled 404,030 in
September, down 0.5% from August and up 5.8% from
September 2018. Median Price: $605,680, down 1.9%
from August and up 4.7% from September 2018. Year-to-
date statewide home sales were down 3.1% in
September. (CAR, October 16, 2019)
CDTFA Cannabis Revenues for 2Q2019: Cannabis
Excise Tax: Generated $74.2 million in revenue reported
on 2Q2019 returns and the cultivation tax generated
$22.6 million. Sales Tax from Cannabis Businesses:
Totaled $47.4 million in reported revenue for the same
period. Total Tax Revenue: Reported by the cannabis
industry is $144.2 million. This does not include tax.
(https://www.cdtfa.ca.gov/news/19-19.htm, August 22,
2019 )
California Trade for September 2019: Total US goods
trade (exports and imports) through California ports was
17.81% (12 month moving average; compared to 17.87%
in August 2019 and 18.17% in September 2018). Exports:
Down $0.7 billion from Sep 2018 (down 4.8%). California
remained in 2nd place with 10.54% of all US goods
exports (12 month moving total), behind Texas at 19.77%.
(DOF, October 2019)
Specific Economic Summary by Region (BLS)
Fresno Area Economic Summary (PDF)
Los Angeles Area Economic Summary (PDF)
Riverside Area Economic Summary (PDF)
Sacramento Area Economic Summary (PDF)
San Diego Area Economic Summary (PDF)
San Francisco Area Economic Summary (PDF)
San Jose Area Economic Summary (PDF)
Santa Rosa Area Economic Summary (PDF)
Other BLS products for California
PART 3: RETAIL NEWS / E-COMMERCE
U.S. Retail Sales – Decline in September
U.S. retail sales fell for the first time in seven months in
September, raising fears that a slowdown in the American
manufacturing sector could be starting to bleed into the
consumer side of the economy. Retail sales dropped
0.3% in September as households slashed spending on
building materials, online purchases and automobiles.
The decline was the first since February.
https://www.census.gov/retail/marts/www/marts_curre
nt.pdf?mod=article_inline (CNBC, October 2019)
Open and Closures: In the US, year-to-date announced
closures have already exceeded the total we recorded for
the full year 2018. Coresight Research estimates
announced US store closures could reach 12,000 by the
end of 2019. So far this year, US retailers have
announced 8,993 store closures and 3,780 store
openings. This compares to 5,844 closures
and 3,258 openings for the full year 2018. Coresight
Research predicts 12, 000 in 2019. UBS predicts as online
shopping continues to grow, another 75,000 stores could
be lost by 2026 (MoneyWise, October 2019)
ATTACHMENT C
ECONOMIC NEWS & TRENDS November 11, 2019
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Discount Retailers Fastest Growing Sector
Discount retail stores have been growing faster than
other retail environments. Non-food value-based or
discount retailers, like Dollar General, are expected to
grow at an annual rate of 5.2% through to 2024. Food
discount stores, like Lidl, are expected to grow at 4.9%.
Conversely, supermarkets are forecast at 4.4%, and
superstores at 2.7%. (Modern Retail, October 2019)
Retail Construction: Just under 80 million sq. ft. of new
retail space is under construction nationally in 2019; a
drop from the last market peak in the years from 2007 to
2009, when an average of 140 million sq. ft. of retail
space annually was under construction. That number fell
during the recession and has continued to drop during
the expansion phase of this cycle. From 2010 to 2012, an
average of just under 60 million sq. ft. of retail space a
year was under construction, CoStar reports. Since 2013,
retail construction has rebounded: 2013 to 2018 saw an
average of 90 million sq. ft., a high for this cycle.
(National Real Estate Investor, October 2019)
2019 Holiday Season
The holiday season is almost a full week shorter in 2019,
with 26 days between Thanksgiving and Christmas,
compared to 32 days in 2018.
Forecast: Total retail sales are expected to climb
between 4.5% and 5.0% for the holiday period, up from
3.1% in 2018. On-line sales are expected to grow in 2019
by 13% to $136 billion. (Deloitte, Sales Force)
“Cash Back Day”: The new shopping holiday will give
consumers up to 20% cash back on items purchased
during that 24-hour period.
https://www.retailmenot.com/cashback
Click and Collect: Will drive last minute shopping; sales
from mobile will account for more than half; 45 percent
of sales will be on Amazon. Black Friday, Cyber Monday
week will be 37% of total. More than half of holiday
orders will include free shipping. (Practical Ecommerce,
August 2019 (RetailMeNot, October 2019 and Sales Force,
October 2019).)
Online Sales Forecast: Will do well because the late
Thanksgiving gives shoppers less time to make it out to
the mall before Christmas. Online purchases will grow by
24% from one year ago. FedEx and UPS won’t charge
extra for delivery around the holidays, unlike in years
past. https://nrf.com/tag/holiday-sales
Retailers View: The National Retail Federation expects
holiday retail sales during November and December to
increase between 3.8 percent and 4.2 percent over 2018 to a
total of between $727.9 billion and $730.7 billion. The
numbers, which exclude automobile dealers, gasoline
stations and restaurants, compare with an average holiday
sales increase of 3.7 percent over the previous five years.
Effect of Tariff: The effect of tariffs on holiday spending,
either directly or through consumer confidence, remains to
be seen. Some holiday merchandise, including apparel,
footwear and televisions, is subject to new tariffs that took
effect September 1, and other products will have the tariffs
applied on December 15. Retailers are using a myriad of
mitigation tactics to limit the impact on consumers, and the
impact will ultimately vary by company and product. Small
businesses, in particular, have already been forced to raise
prices. Holiday sales during 2018 totaled $701.2 billion,
an unusually small increase of 2.1 percent over the year
before amid a government shutdown, stock market
volatility, tariffs and other issues.
In-Store Shopping Forecast: In-store shopping
dominates during the holidays. Online orders will equal
just one-fifth of in-store purchases. Two-thirds will buy
both in-store and online. A popular option: Ordering
online and picking up in the store. This year, 60% of
retailers will offer this method, up from 52% last year. It’s
an opportunity for stores to sell more by getting
customers in the door for more impulse buys. (Kiplinger,
October 11, 2019)
ATTACHMENT C
ECONOMIC NEWS & TRENDS November 11, 2019
7 www.avenuinsights.com
PART 4: AUTO SALES AND GASOLINE
California: New Auto Sales for 2019: Predicted to fall
below two million units in 2019. The state’s new vehicle
market is predicted to decline 4.6 % from 2018 to 2019,
which would be the third consecutive annual decline.
Although the market is shifting lower, new vehicle
registrations are well above average, based on historical
standards. Used Cars: Up 5.2% thru June of 2019. Used
light truck registrations were up 8.5% Registrations for 6
year old or newer vehicles were up 10.2% thru June.
(https://www.cncda.org/wp-content/uploads/Cal-
Covering-2Q-19.pdf. August 2019)
California and National Gas Influences: Price as of
November 6, 2019. California’s average is 4.076 (the
average a year ago was $3.740). (American Automobile
Association and GasBuddy).
PART 5: RESTAURANT AND GROCERY TRENDS
For September 2019: Dining and Food: The food index
increased in September by 0.1%. Food at Home: The
food at home index rose 0.6% over the last 12 months.
Was unchanged in September after falling in each of the
prior 3 months. Food Away From Home: Rose 0.3% in
September after increasing 0.2% in August. Rose 3.2%
over the last year. Full Services Meals: Increased 0.3%
in September; and over the year, increased 3.6% and the
index for limited service meals rose 3.0%.
Selected Groups: The index for cereals and bakery
products increased 0.5% after declining in August. The
indexes for meats, poultry, fish, and eggs and for other
food at home both increased 0.3%. The index for dairy
and related products advanced 0.2%, and the index for
nonalcoholic beverages rose 0.1%. These increases were
offset by a decline in the index for fruits and vegetables,
which fell 1.0% in September following a 0.5% decline in
August. The indexes for fresh fruits and for fresh
vegetables both declined in September.
(https://www.bls.gov/news.release/cpi.nr0.htm, October
10, 2019)
National Restaurant Association Restaurant 2030
Report/ 10 Year Outlook
Key economic projections for 2030 include: Restaurant
industry sales are expected to reach $1.2 trillion by 2030.
The industry workforce will likely exceed 17 million by
2030. Total U.S. employment is projected to increase at
an annual rate of 0.5% during the next decade. Total U.S.
employment is expected to increase 8.5% between 2018
and 2030.
The definition of “restaurant” will change as off-
premises continues to drive industry growth: Guests
will expect a seamless digital experience and want their
preferences known at each interaction with a restaurant.
As off-premises traffic and sales continue to accelerate,
consumers will place a heightened importance on
experiential dining for on-premises occasions.
Areas to watch include: A greater proportion of meals
will no longer be cooked at home, lending to the
continued rise in delivery, virtual restaurants,
subscription services, and grab-and-go at retail locations.
Cloud kitchens will continue to grow, fueled by the
expansion of centralized kitchens and the growth of
online, delivery-only brands. Governments are likely to
impose further regulation on third-party delivery. The
restaurant of the future will be smaller in size. Smaller
restaurants could incorporate more automated kitchen
equipment and the typical kitchen layout may change.
https://restaurant.org/restaurant-industry-2030-report,
November 2019
Online Grocery Trends: Digital grocery sales in US are
estimated to reach $59.5 billion by 2023 from $23.9
billion in 2018. 48% of US grocery shoppers currently
purchase at least some of their groceries online and 59%
intend to in 2019. 25% of US grocery shoppers plan to
shop 40% or more of their grocery shopping online in
2019. https://www.invespcro.com/blog/us-online-
grocery-shopping/
ATTACHMENT C
ECONOMIC NEWS & TRENDS November 11, 2019
8 www.avenuinsights.com
PART 6: SELECTED RETAIL UPDATES
Sources: The Shelby Report; Plain Vanilla Shell, California
Employment Development Department - Period Covered:
July 17, 2019 to November 10, 2019.
https://www.edd.ca.gov/jobs_and_training/warn/WARN
_Report_for_7-1-2019_to_10-25-2019.pdf
Albertsons: Partners with DogSpot for shoppers with
dogs that might be otherwise left in the car.
Abercrombie & Fitch: Will close up to 40 stores in 2019.
Ashley Home Store: Celebrates 1,000th store opening.
Avenue: 222 closures in 2019.
Barneys: Closing 21 stores in 2019, including the San
Francisco location.
Bed Bath and Beyond: Closing 60 stores in 2019.
Bath and Body Works: In 2019 plans for 60 closures.
BJ’’s: Newport Beach location closed, November 2019.
Blue Diamond: Opens new energy saving manufacturing
facility in Salida.
Chicos: Closing the first of at least 250 over four years.
Chili’s: Milpitas location closed effective November
2019.
Coffee Bean and Tea Leaf: Opening locations including
a store in East Pasadena.
Costco: Now operates 544 U.S. locations. Opened 10
new U.S. units and relocated two stores.
CVS: Will close 75 retail stores in 2020 mostly through
lease expirations; 46 will close in 2019.
Dressbarn: 650 stores closing in 2019.
ExtraMile: Opens 900th location in Carlsbad.
Forever 21: Closing up to 178 in 2019. According to the
EDD WARN report 1170 jobs will be lost.
Gap: Closing the first up to 230 over two years.
Game Stop: Closing up to 200 stores in 2019.
Gelson’s: First grocery retailer to carry The Impossible
Burger.
Gymboree: 800 stores closing in 2019.
Home Goods: Adding stores in other states.
IHOP: Will open additional restaurants.
J.C. Penny: Closing 27 stores in 2019.
J. Crew: Closing 20 stores in 2019.
Jared Jewelry: Closing 150 stores in 2019.
Kmart: Closing 127 stores in 2019.
Kohls: Closing 8 stores in 2019.
Lifeway Christian: Closing 170 stores in 2019.
Lord and Taylor: American’s oldest department store is
closing 9 stores in 2019; has new partnership with
Walmart which will offer 125 upscale brands.
Lost Cajun: Named one of the top 50 emerging chains.
Lowe’s: Closing 51 stores in 2019.
Macy’s: Closing 6 stores in 2019; bringing in Pot Belly
restaurants to some locations.
Monroe: Will acquire nine tire and auto services stores
in California.
Nordstrom: Closing 6 stores in 2019. Stonetown location
closed in September. Investing in its Rack stores.
Office Depot: Closing 59 stores in 2019.
Old Navy: To open 800 new stores as it splits from Gap.
Party City: Closing 55 stores in 2019
Payless Shoe Source: Closing 2,100 stores in 2019
Performance Bicycles: Closing 102 stores in 2019.
Pier 1 Imports: Closing more than 140 stores in 2019.
Planet Fitness: Will open 225 stores this year; many are
in former Sears and Toys R Us spaces.
Potbelly: To close more stores this year than opens.
Raley’s: Flags sugar conte nt in pasta sauce.
Rite Aid: California locations will give out free Thrifty
ice cream with annual flu shot.
Save Mart: City of Modesto location enters into
partnership with Cannabidiol brand cbdMC.
Sears: Closing 107 stores in 2019.
Sprouts: Opening location in Vista and Lake Forest.
Superior Grocers: Opens small format stores in Los
Angeles.
Target: Closing 6 stores in 2019; opening 30 new smaller
locations; plans remodeling of 300 stores. Won’t raise
prices over tariffs.
Things Remembered: More than 200 closures in 2019.
Top Shop: Closing 11 locations in 2019.
Victoria Secret: Closing 53 stores in 2019.
Walmart: Closing 18 non-California locations in 2019.
On-line platform will offer 125 upscale brands. A
Sacramento and Los Angeles location will close in
December. In 2019, there are 6 fewer days between
Thanksgiving and Christmas. See above Lords and Taylor.
Walgreens: Closing 200 stores in 2019; to open more
‘small stores’ in large cities.
Whole Foods: Open store in Long Beach with restaurant
and bar; opens location in South Lake Tahoe.
Z Gallerie: Closing 44 stores in 2019.
Blue Font Includes Closings
ATTACHMENT C