As Miamidade Consumer Spending Rebounds Gas Prices Could Be Spoiler
Written by Miami Today on March 3, 2011
By Ashley D. Torres
A potential spike in gas prices could erode year-over-year gains in Miami-Dade County taxable sales that signaled a return of consumer confidence, area economists say.
Miami-Dade’s total taxable sales, which represent consumer spending on goods subject to state sales tax, rose 6.5% year over year in December, according to figures released by the legislature’s Office of Economic and Demographic Research. The rise marks the fifth consecutive month of year-over-year growth in taxable sales.
Holiday shopping’s rise in December was reflected in year-over-year gains in consumer nondurable and durable taxable sales, which climbed 3.8% and 8.7%, respectively.
Consumer durables taxable sales are big-ticket items like appliances and furniture and nondurables are smaller, more expendable purchases such as clothing or paper products.
Despite the rises in these categories, spending in the Miami area is only about 58% back to where it was before the recession, said Sean Snaith, University of Central Florida Institute for Economic Competitiveness director, as the labor market continues to struggle.
Once there’s more job growth and unemployment begins to fall, he added, there will be more improvements.
Miami-Dade’s December seasonally-adjusted unemployment rate rose to 13.6% as the county’s labor force continues to grow faster than the number of residents holding jobs, according to the Miami-Dade Monthly Economic Indicators report.
Projections that gas prices could spike in coming months to $4 or $5 per gallon could also impact consumers’ amount of disposable income.
"Gas prices," Mr. Snaith said, "definitely have the potential to erode those sales growths."
If gas prices only spike for a month or two and then return to about $3 a gallon, said J. Antonio Villamil, dean of the St. Thomas University’s business school, the impact won’t be as significant.
Depending on how the situation evolves, several months of rising gas prices could take steam out of the recovery or, worst case scenario, Mr. Snaith said, push the economy back into a recession.
Rising gas prices could also impact auto sales, especially sales of large vehicles.
Nonetheless, autos and accessories taxable sales continue to show year-over-year rises, climbing 6.5% in December. The hike in year-over-year auto sales, Mr. Snaith said, reflects a more confident consumer as well as pent-up demand for vehicles.
Another category seeing continued growth in Miami-Dade is tourism and recreation taxable sales, which rose 7.3% year over year in December to $742.7 million.
Following along on the trend, December also saw a 4.5% year-over-year rise in Miami-Dade hotel occupancy to 70.7% from 67.6% in December 2009, according to Smith Travel Research’s Trend Report. The report also showed average daily room rates spiking to $160.68, up 3% from December 2009′s $155.98.
The continued rise in tourism taxable sales, Mr. Villamil said, signals a consumer recovery expected to continue into the first quarter 2011 figures.
Business investment taxable sales, which include business equipment purchases, rose 2.4% year over year in December to $567.9 million. The rise can be attributed to businesses that have seen record profits over the past year because of recession cost-cutting, Mr. Snaith said, and are beginning to plow that money back into investments.
Building investment taxable sales for purchases such as construction materials also climbed 2.8% year over year in December to $107.7 million.
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