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Taxable Retail Sales

Description: 

Retail sales measure economic activity in one segment of the economy and thus serve as an indicator of economic health. In addition, the sales tax is an important source of revenue to Arizona’s state and local governments.

Only those retail categories subject to the state’s transaction privilege (general sales) tax are included in the retail sales data produced by the Arizona Department of Revenue. For example, sales of food items at grocery stores that are not taxed by the state are not included. Directly comparable national data are not available.

The data presented on Arizona Indicators include the “retail” classification of the sales tax and the restaurant and bar classification, with the total of these two components also displayed. Monthly data, adjusted for inflation using the national consumer price index, are presented for the last several years. The year-over-year percent change and the seasonally adjusted dollars are displayed. Annual retail sales data for Arizona are expressed per $1,000 of personal income in order to adjust for inflation and the growth of the state over time. The data begin in 1984, with annual percent changes also provided.

Data Source: 

Arizona Department of Revenue; the data are not available online. The release date of the monthly data for Arizona is erratic, but is at least two months after the sales were made.

The Consumer Price Index is released monthly by the U.S. Department of Labor, Bureau of Labor Statistics, two-to-three weeks after the end of each month: http://www.bls.gov/cpi/.

For personal income, preliminary annual data are released in March, with revised annual data reported in September: http://www.bea.gov/regional/index.htm.

Data Quality Comments: 

Rather than an economic series, the retail sales data from the Arizona Department of Revenue represent an accounting series in which reporting errors are not corrected. Retailers sometimes report late and multi-establishment retailers sometimes misreport sales by county. When possible, the Department of Revenue estimates the effect of significant changes in reporting; the adjusted numbers are reflected in Arizona Indicators.

The county data are not presented on Arizona Indicators because of their unreliability. While seasonally adjusted data are provided on Arizona Indicators, significant monthly fluctuations preclude these data from being used to calculate a month-to-month change. Instead, the emphasis is on comparing one month’s data to the figures for the same month in the prior year.

iconRetail Sales in Arizona, Inflation-Adjusted Year-Over-Year Percent Change

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Visualization Notes:

Adjusted for inflation but not for population growth or economic growth, sales in the retail classification rose at double-digit percentage rates into early 2006 in Arizona, but fell at double-digit rates from late 2008 through much of 2009. The year-over-year percent change remained negative through August 2010 before finally turning positive for the first time in more than three years. Retail sales grew strongly from January through October of 2011 but gains were weaker from November 2011 through September 2012. Growth strengthened somewhat from October 2012 through November 2013 but then weakened somewhat. Gains were strong from November 2014 through April 2015, the latest data.

iconRetail Sales in Arizona, Seasonally Adjusted and Inflation-Adjusted

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Visualization Notes:

From early 2007 through the middle of 2009, the volume of sales in the retail classification in Arizona decreased very considerably — even before adjusting for population growth or economic growth. The low point was reached in January 2010, with the inflation-adjusted total down 31 percent from the April 2007 peak. The real April 2015 figure was 30 percent higher than the trough but still was 10 percent less than the prerecession peak. Just 68 percent of the inflation-adjusted decline in retail sales had been made up 63 months after the trough and 96 months after the prior peak.

iconRetail Sales Per $1,000 of Personal Income in Arizona

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Visualization Notes:

Total retail sales should increase at about the same pace as the overall economy, as measured by personal income. However, taxable retail sales in Arizona are generally limited to goods purchased in stores, while consumer spending continues to shift to untaxed services and to untaxed purchases made using the Internet. Therefore, retail sales per $1,000 of personal income in Arizona have trended down since the earliest year of data in 1984. The rate of decrease varies with the economic cycle; the long and deep recent recession caused retail sales per $1,000 of personal income to fall substantially in 2008 and continue to decline through 2010. Because of the deep decline during the recession, retail sales relative to personal income rose in each year from 2011 through 2014, but the cumulative increase over the four years was only 9 percent.

iconRetail Sales Per $1,000 of Personal Income in Arizona, Percent Change

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Visualization Notes:

Taxable retail sales in Arizona are generally limited to goods purchased in stores, while consumer spending continues to shift to untaxed services and to untaxed purchases made using the Internet, causing retail sales per $1,000 of personal income in Arizona to trend down. Thus, retail sales per $1,000 of personal income in Arizona have increased only in occasional years between 1985 and 2010, sometimes rising during recoveries from recessions and at the peak of the economic cycle. The gains from 2011 through 2014 were tied to the economic recovery and the depth of the last recession.

Data Source

Arizona Department of Revenue; the data are not available online. The release date of the monthly data for Arizona is erratic, but is at least two months after the sales were made.

The Consumer Price Index is released monthly by the U.S. Department of Labor, Bureau of Labor Statistics, two-to-three weeks after the end of each month: http://www.bls.gov/cpi/.

For personal income, preliminary annual data are released in March, with revised annual data reported in September: http://www.bea.gov/regional/index.htm.