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General merchandise sales rise in Washington Co.

November 28, 2009|By ARNOLD PLATOU

WASHINGTON COUNTY -- Washington County's economy is starting to gain strength in the retail sector -- just in time for Christmas, according to the latest sales tax collections data.

In the first nine months of this year, spending fell 4.5 percent across all kinds of business in the county compared to the same period a year ago, according to a Herald-Mail analysis of the data.

But in the general merchandise category -- department, discount, sporting goods, toys and other such stores -- sales actually held steady from January through September compared to a year ago, the data shows.

October's sales tax reports, reflecting September's purchases, were the more recent available from the Maryland Comptroller of the Treasury.

They show an interesting sign: This September, for the first time since January, general merchandise sales increased in local stores over that same month last year. The data shows sales jumped 4.9 percent over purchases here in September 2008.

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That's encouraging news, said Stacey McGee, who teaches economics at Hagerstown Community College.

"You hate to make predictions based on one month, but it's a good thing that it's not going back down," McGee said.

Jimmy Feltz, manager of Kmart off Massey Boulevard in Valley Plaza on Hagerstown's southwestern edge, said he already is seeing signs of a stronger Christmas season, at the least.

"Especially for September, we noticed definitely, the customer starting early," Feltz said. "That was a big difference from the past two years.

"And layaways (are) just through the roof. We've already outdone what we did last year for the whole Christmas season. Probably three weeks ago, we had already topped that number clearly -- all the different corners (different kinds of merchandise) of the building."

What does it mean?

Whether the county's economy is rebounding or the latest signs are deceptive is far from clear and certainly not to be judged by retail sales alone.

Economists "want to see two consecutive quarters of this before they make a more positive statement," McGee said. "So by the time they finally said, 'We're in a recession,' they said, 'We entered it nine months ago.'"

Experts look at leading, coincident and lagging indicators to judge when significant economic change is happening, McGee said. The signs include many more factors than can be measured on a localized basis.

One leading indicator -- changes that usually occur in advance of economic swings -- that The Herald-Mail tracks monthly is building permits. A cursory look there shows no consistent trend back toward a growing economy.

Other such indicators include production workweek, unemployment insurance claims, money supply, inventory changes and stock prices, McGee said. Nationally, she said, "those leading indicators have been going up, mostly for the last six months, not steadily, but mostly."

Coincident indicators, those that occur simultaneously with today's business cycle, include nonfarm payrolls, industrial production, personal income, and sales from manufacturing and trade, she said.

So-called lagging indicators include unemployment, corporate profits, labor cost per unit and interest rates, she said.

The county's jobless rate, a lagging indicator, has been in the 9 percent to 10 percent range all year, compared to last year's 4 percent to 6 percent range.

The jobless rate improved from 9.8 percent to 9.4 percent in September. On Monday, Maryland is to release the county's October rate.

Whatever it reveals about the local economy, it won't show whether we're recovering or how close we are, McGee said.

The nation's gross domestic product (GDP) -- essentially, the market value of all of the goods and services produced -- shows that the economy in the July, August and September quarter began growing again after four straight quarters of contraction.

Many economists are seeing that as a sign of health, "but it could still be a while before unemployment improves," McGee said.

"When we went into the recession, companies continued to produce and sales slowed down, so the inventory starts to build up," she said. "So now, they've got all this inventory built up, they're going to want to use up all this inventory before they start hiring again. And the other thing is, they want to make darn sure we're out of this before we start hiring again.

"So you can be out of the recession a good six months before you start to see an increase in employment or a decrease in the unemployment rate."

Tracking how much shoppers are spending compared to previously gives you a good idea what's happening now, McGee said.

"You don't actually see retail sales as one of the indicators, but you can see how they relate," she said. "Higher sales lead to higher production, and that boosts the economy."

What we're spending

Based on the data for Washington County, The Herald-Mail determined that we -- you, me and everybody else -- spent about $1.16 billion here from January through September.

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