Retail sales in Spokane are expected to slow in 2023 after strong showings the last couple of years which were buoyed by pandemic relief funds, says Patrick Jones, executive director of the Institute for Public Policy and Economic Analysis at Eastern Washington University.
Jones notes that according to the Bureau of Economic Analysis, the U.S. personal savings rate dropped in October to below 2.4% compared with 7.3% a year earlier, which will impact how much people spend this holiday season and into next year.
The savings rate is the percentage of disposable, after-tax personal income that is saved. Since 1959, the national savings rate has dropped to this level only once, in 2005, says Jones.
“Not only has the U.S. spent through its bonus savings from the pandemic, but now its savings levels are lower than pre-pandemic savings which doesn’t augur too positively for a robust holiday season,” he says.
Going into the holiday season, Jones predicts that sales in Spokane County will be up in terms of dollar volume compared with the 2021 holiday season due to inflation.
“Last year, retail sales went up 16% year-over-year,” he says. “I don’t think we’ll see double digit increases year-over year in the fourth quarter of 2022.”
According to reports from the Washington state Department of Revenue, taxable retail sales for Spokane County in the first quarter of 2022 were $3.2 billion, a 6% year-over-year increase from the first quarter of 2021, compared with the state increase of 10.7% year-over-year.
Bryn West, vice president of Spokane’s River Park Square says, however, that there has been a big shift in retail, and not only are more people shopping both in-person and online, but retail has played a role in driving up employment across the country.
Jones says, the hospitality and restaurant industry in Spokane County, which also falls within retail sales, had strong first-quarter sales, with the hospitality industry increasing 130% compared with the pandemic-influenced year-earlier quarter, and restaurants and bars increasing retail sales by 25%.
Despite the strong start to the year, Anthony Anton, president and CEO of Washington Hospitality Association says that when compared with 2019 sales, the restaurant industry hasn’t recovered yet.
“There is no doubt 2022 was better than 2021, and 2020,” he says. “But … those years were so horrible.”
Anton says the industry is struggling with continuing labor shortages.
Another setback for restaurants in 2022 is that the Restaurant Revitalization Fund failed to pass in the U.S. Senate, he claims. On average, restaurants in the state of Washington incurred $160,000 in debt due to COVID-19, he adds.
Anton contends that 43% of restaurants received grant support, while the majority were left out of the stimulus programs.
“For a lot of restaurants that didn’t receive relief, the clock is ticking,” says Anton. “The reality is you can’t carry debt forever.”
Although the future is uncertain for restaurants struggling with pandemic-incurred debt, Anton says hospitality is making gains as more people are returning to work in the industry.
“We are hoping that trend continues,” he says.
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