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Utah more resilient than most as early retail recovery signs appear

SHARE Utah more resilient than most as early retail recovery signs appear

Trae Groshong, Mari Mosqueda, Erick Pablo and Auston Garcich, left to right, chat as they wrap up a meal at Sweet Lake Biscuits & Limeade in Salt Lake City on Wednesday, June 17, 2020.

Spenser Heaps, Deseret News

SALT LAKE CITY — U.S. retail sales came roaring back in May and are helping drive optimism that an economic recovery is afoot even as numerous states, including Utah, see rising numbers of COVID-19 cases.

And, the retail sector of the once-soaring Utah economy is proving to be much more resilient to the economic impacts of COVID-19 than most of the rest of the country, with some segments even flourishing amid the unprecedented circumstances.

While much of the U.S. saw double-digit slumps in retail sales volumes in the last few months thanks to pandemic-related restrictions, retail revenues in Utah — excluding bar and restaurant business — have continued to perform better than 2019, though growth rates have slowed.

At a press event Wednesday, Gov. Gary Herbert announced an update to his Utah Leads Together plan that includes the first glimpse of a statewide recovery plan. That recovery, Herbert said, is one that has already begun.

“I think we have an opportunity to be optimistic that we are on the road to recovery already,” Herbert said. “We’ve had better success than most any state in America.”

A U.S. Census Bureau report released Tuesday highlighted $485.5 billion in retail and food service sales nationwide in May, an increase of 17.7% over April volumes but still down over 6% from May 2019. In comparison, those revenues were down almost 15% in March and nearly 13% from December 2019 through February of this year.

In Utah, state tax commission data shows taxable retail revenues, not including bars and restaurants, were up 9.3% in March and 9.5% in April compared to the previous year.

And, those crowds many have encountered recently at local home improvement stores have helped drive Utah sales of building materials and garden equipment to a 17.8% sales increase in March and a whopping 29.5% increase in April over 2019 figures. That pace crushed national numbers which showed home improvement store sales down in March and up around 11% in April.

Utah food and beverage store sales also saw a big influx in the first months of the pandemic with sales up 37% in March and almost 16% in April.

While there are plenty of bright spots on Utah’s retail landscape, the public health crisis has laid waste to a few industries that are just now entering the early stages of recovery.

Utah’s food and beverage service sector was down some 24% in March and over 37% in April, with thousands of employees in that arena still on unemployment rolls. Likewise, retailers specializing in clothing saw declines nearing 43% in March and over 68% in April, according to tax commission data.

Eric Cropper, Utah State Tax Commission senior economist, said the strength of the state’s pre-pandemic economy helped blunt some of the impacts of COVID-19 and that federal stimulus funds were also bolstering retail spending. Cropper said he expects to see some better revenue numbers for the most severely impacted Utah retail businesses following the easing of restrictions by state leaders in mid-May.

“In the industries hit the hardest, we could see some big jumps,” Cropper said. “But, we may see decreases other places. As people start to eat out more, spend more on clothing there will likely be some trade-offs.”

And, while not captured in the assessments of retail sales volumes, some other business sectors in the state have experienced even more precipitous declines.

Utah’s arts and entertainment businesses saw volumes drop 42% in March and almost 73% in April, and the state’s hotel/motel sector was down over 45% in March and nearly 87% in April.

One of Utah’s most significant revenue generators could be facing the longest road to recovery from COVID-19 effects.

James Wood, the Ivory-Boyer senior fellow at the University of Utah’s Kem C. Gardner Policy Institute, noted that while current projections reflect a fairly speedy economic comeback for the state in the next 12 to 24 months, the Utah communities that rely most on tourism could see the slowest pace of recovery.

“Tourism represents a significant revenue generator and economic activity catalyst in Utah,” Wood said. “I expect that is going to see a much slower path to recovery than most other sectors.”

Tourism supports over 130,000 jobs in Utah and generated almost $10 billion in 2018, critical revenues that will likely be the hardest to recover as pandemic restrictions continue to ease in Utah and around the country.