”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.
Buzz: California consumers are getting less for their money this year as inflation trims already cooling shopping habits.
Source: My trusty spreadsheet sought to quantify how the rising cost of living eroded buying power and cash register activity. So state-by-state retail sales were matched against the inflation rate from the Consumer Price Index. Then we looked at how 2023’s first half spending compared with recent history.
Topline
California retail sales in the first half of the year grew 0.9% vs. 2022’s first six months. Meanwhile, inflation averaged 4.9% in this period.
So shopping, adjusted for the bite of a significant cost of living hike, suffered a 4% one-year drop.
- MORTGAGE NEWS: What’s up with rates? Who’s lending? CLICK HERE!
That was a middle-of-the-road result. California ranked 25th in this buying-power benchmark among the states. And it was almost the same as a 4.1% median decline nationwide.
Every state had after-inflation sales drops, with Idaho the largest at 8.7%. Then came Wyoming at 8.4% and West Virginia at 7.2%.
The smallest dips were found in Iowa at 0.7%, then Washington, D.C. at 0.9% and Massachusetts at 1.1%.
Details
The pandemic era’s early spending spree could not be sustained long-term – especially in particular Western and Southern states that were economic wunderkinds during the pandemic era.
Ponder the huge sales gains, even after inflation, in the two years ended June 2022.
California shopping grew at an 11.9%-a-year pace while the cost of living inflated 4.7%. The eye-popping 7.2% after-inflation growth ranked No. 25 among the states. And it was a smidge faster than 7.1% gains nationwide.
- RENT TRENDS: What’s available – and what are landlords charging? CLICK HERE!
Every state advanced. The biggest jump of 2020-22 was in Idaho at 10.7% a year. Then came Tennessee at 10.5%, and Montana at 10.4%.
Smallest increases were seen in Rhode Island at 4.3%, West Virginia at 4.6%, and Maine and North Dakota at 4.8%.
Bottom line
You can’t blame a loss of buying power for all of this year’s shopping sluggishness.
For starters, the consumer spending gains coming out of 2020’s pandemic lockdowns could never be replicated.
Various stimulus efforts ended and there was no longer a need to stock up for work or schooling at home.
- REAL ESTATE NEWSLETTER: Get our free ‘Home Stretch’ by email. SUBSCRIBE HERE!
And don’t forget, the Federal Reserve’s been trying to chill inflation with its economy-choking high interest rates.
So, it’s little surprise shopping looks icy. Just look at 2023 vs. the previous two years.
California’s after-inflation shopping was 11.2 percentage points weaker – this year’s 4% drop vs. 7.2%-a-year growth in 2020-22.
Again, it’s a fairly typical result, ranking 24th among the states and practically the same as the nation’s shopping slump.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]