Payroll tax increase? Meh.
Nevada consumers mostly ignored the Jan. 1 expiration of a two-year Social Security tax holiday and pushed up spending significantly in several key categories in January.
Statewide taxable sales, which measure the amount of tangible goods sold through Nevada merchants, increased 9.3 percent year over year in January, to $3.45 billion, the state Department of Taxation reported Tuesday. Sales in Clark County were up 8.2 percent, to $2.52 billion.
Credit an improving jobs market and stabilizing housing prices for the boost in spending, said Brian Gordon, principal of local research firm Applied Analysis.
After a year’s worth of 2.5 percent job creation, January’s statewide unemployment rate slipped below 10 percent for the first time since early 2009. And single-family home prices were up 24 percent year over year in February, to $150,000, according to the Greater Las Vegas Association of Realtors.
So it didn’t seem to hurt that take-home pay slipped 2 percent in January, with the end of the federal payroll tax break. The expiration will mean roughly $1,000 a year more in taxes for a household earning $50,000 annually.
“There have been some economic headwinds, but consumers appear to have shrugged them off,” Gordon said. “The latest taxable retail sales data demonstrate their willingness to spend more.”
And how: Nearly every major spending sector saw double-digit gains in Clark County. Sales of clothing and accessories spiked 10.7 percent, while dealers of cars and car parts posted a 16.3 percent surge.
General merchandise stores, including department stores, saw a 13.2 percent increase. Also up were sales of electronics and appliances (34 percent); building materials and garden supplies (18.4 percent); and groceries (13.3 percent). The only laggard was bars and restaurants, where sales ticked up 0.7 percent.
Even construction-related sales, though a fraction of their 2009 heyday, were up dramatically, jumping nearly 41 percent year to year in January, thanks to hotel room renovations, growing housing starts and big projects, such as The Linq retail project on the Strip.
Still, neither the state nor the county has seen sales return to peak levels. Nevada’s sales tally was 6.9 percent below the high for the month, set in 2007, at $3.7 billion. Clark County’s sales were 9.5 percent below January 2007’s apex of $2.79 billion.
Things have improved since the depths of the downturn. Nevada sales were up 22.2 percent from their January 2010 low of $2.82 billion, while county sales were up 18.7 percent from a trough of $2.12 billion. Gordon called it a new normal that’s “more reflective of sustainable spending levels.”
Going forward, he said he’ll continue to watch the jobs and housing markets, which affect paychecks and consumers’ willingness to spend. In particular, any significant shift in foreclosure laws that boost supply and bring down prices could affect whether homeowners are in the mood to shop, he said.
In all, 12 of Nevada’s 17 counties posted sales increases in January. Gross revenue collections from sales and use taxes, which help fund prisons and schools, were $272.2 million, a 9.5 percent jump year over year. The General Fund share of collections came in 1.23 percent, or $6.6 million, below projections of the Economic Forum, a nonpartisan group that forecasts revenue for budgeting.
Contact reporter Jennifer Robison at jrobison@review journal.com or 702-380-4512. Follow @J_Robison1 on Twitter.