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SANDAG report
SANDAG reported last week taxable sales are down nearly $2.3 billion from February to April. Courtesy photo
Community News Region

SANDAG: Taxable sales down $2.3 billion due to COVID-19

REGION — Municipalities across the region, state and country are bracing for a significant reduction in tax revenue due to the COVID-19 pandemic.

Last week, the San Diego Association of Governments reported taxable sales are down nearly $2.3 billion from February to April, according to a data science and analytics report.

Since the stay home order began in mid-March, SANDAG has been closely monitoring the economic impact of the pandemic in the region.

“Our Chief Economist Ray Major and his team are working around the clock to support local elected officials and other decision-makers with relevant data and analysis to manage this pandemic,” said SANDAG Executive Director Hasan Ikhrata in a statement. “These reports have been essential tools to determine next steps in the region’s economic road to recovery.”

The new SANDAG report estimates the region’s taxable sales went from an average of $5.3 billion each month prior to March 15, down to nearly $3 billion in April. It represents a decrease of about 44% or roughly $2.3 billion. The report estimates the largest losses in taxable sales are to apparel stores, down 83%, and restaurants, down 67%.

Also, apparel stores, restaurants, service stations and business to business were the hardest-hit sectors, according to SANDAG.

Businesses that remained open and fared well during this time frame were food markets and big-box retail stores such as Costco, Target, and Walmart.

Other department stores, food markets and liquor stores were less impacted than other sectors. Additionally, online retail has seen an increase during the pandemic, SANDAG reported.

“It is interesting to learn that grocery stores and pharmacy sales are actually down by 10%, while home improvement sales have spiked,” said Major. “We can assume that during the pandemic, people had more time to work on outdoor landscaping, gardens and other home beautification projects. Plant seed companies also saw increases — nearly four times their average sales.”

The outlook for the home improvement industry remains strong as consumers continue to invest in upgrading their homes and likely due to the stimulus check distribution by the federal government.

As for economic recovery, SANDAG forecasts a return to pre-COVID levels in mid-2021 and pre-COVID trend levels (where the region would have been in the absence of this pandemic) in mid-2023. Still, SANDAG is refining its recovery scenario based on the on-going reopening of the economy.

Online retailers such as Amazon also continue to increase market share, as consumer spending increased 35%, demonstrating a potential re-invention of eCommerce and a reshaping of retail in the future. This spike resulted in an announcement by Amazon to hire 175,000 new employees during the pandemic.

As for the agencies “5 Big Moves” multi-billion dollar transportation plan centering on transit, the 2021 regional plan is still on schedule for the draft to be available for public review and comment in spring 2021. The final plan will be presented to the Board of Directors for adoption in late 2021.

However, SANDAG said it’s closely monitoring the response to the COVID-19 pandemic, including budget implications and telework and transportation trends. The plan is a long-range planning document aiming improvements through 2050 and beyond.

As the 2021 Regional Plan is developed and funding needs are identified, SANDAG said it will work with the board to identify potential funding sources and strategies.