Arkansas Taxable Sales Up 0.9% in the Third Quarter

By , November 10, 2010 9:30 AM

Recent data on sales tax collections from the Arkansas Department of Finance and Administration show that taxable sales continued to expand in recent months.  After adjusting for the timing of tax collections, changes in tax law, and recurring seasonal fluctuations, recent sales tax growth suggests that Arkansas Taxable Sales increased by 0.9 percent in the third quarter of 2010.* 

This is the fourth consecutive quarterly increase, confirming that sales growth in Arkansas is continuing to recover substantially from the 2007-09 recession.  Over the past four quarters, Arkansas Taxable Sales have risen by 7.2 percent.

Sources:  Department of Finance and Administration, Institute for Economic Advancement

Sources: Arkansas Department of Finance and Administration, UALR Institute for Economic Advancement

The third quarter gain is smaller than the previous two quarters.  As shown in the chart below, this deceleration is consistent with the pattern of national retail sales, which slowed from a 1.1 percent growth rate in the second quarter to a 0.6 percent rate in the third quarter.  But Arkansas continues to outpace the rest of the country:  Over the past four quarters, U.S. retail sales have grown at a rate of 5.6%, compared to the 7.2 percent rate for Arkansas Taxable Sales.  The recovery in sales growth in Arkansas may have lagged behind the rest of the nation, but the most recent data continue to indicate that Arkansas is rebounding more quickly.
Sources:  Department of Finance and Administration, Institute for Economic Advancement

Sources: Arkansas Department of Finance and Administration, U.S. Census Bureau, UALR Institute for Economic Advancement

The third-quarter increase is likely to be characteristic of sales growth over the next several quarters.  Rapid growth in the first half of the year reflected pent-up demand from the recession, and sales are now likely to settle into a more sustainable long-run pace.  Over the next two years, Arkansas Taxable Sales are forecast to grow in the range of 3 to 4 percent annually.

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*In early November, we would typically be reporting preliminary figures for the third quarter based on information from the DFA General Revenue Report for October and Arkansas Fiscal Notes for September.  Thanks to Dr. George Foy at DFA for providing the data needed to calculate final figures for the third quarter in advance of the usual publication schedule.

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The Arkansas Taxable Sales series is calculated by IEA to serve as a timely measure of Arkansas retail sales.  The series is derived from sales and use tax data from DFA, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.

A spreadsheet of the most recent data is available here:  Arkansas Taxable Sales data (Excel file)

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