Third Quarter 2001 - Taxable Sales

NR# 23-C
Date: July 30, 2002
Customer & Taxpayer Services Division

Third Quarter 2001-Taxable Sales

John Chiang, Chair, State Board of Equalization, announced today that taxable sales in California declined during the third quarter of 2001, posting the first decline in quarterly growth since the second quarter of 1993. Transactions subject to the sales and use tax totaled $109.3 billion during the third quarter of 2001, a decrease of $3.2 billion, or 2.9 percent, from the third quarter of 2000.

In constant dollar terms, taxable sales declined by 2.7 percent over the same quarter a year ago. The California Taxable Sales Deflator measured a slight deflation rate of 0.2 percent for the third quarter of 2001.

Retail stores posted taxable sales of $72.6 billion, a 0.1 percent decrease over the same period a year ago. Retailers of durable goods experienced a 0.7 percent decrease, while non-durable goods showed a 0.5 percent increase.

In the durable goods category, new car dealers posted taxable sales of $12.9 billion during the quarter, a 4.5 percent increase over the same period a year ago. Retailers of building materials registered continuing healthy growth in sales. Building material dealers posted taxable sales of $6.4 billion, up 7.4 percent from a year earlier. Construction contractors showed slower growth over the same period last year with taxable transactions of $5.0 billion, an increase of 2.2 percent. However, furniture and appliance dealers did not fare as well, showing a decline of 5.6 percent on sales of $3.2 billion.

Gasoline consumption increased slightly and measured 3.9 billion gallons. However, the average price of gasoline during the third quarter was $1.613, a 1.3 percent decline from the previous year's price. While these factors produced a slight increase in sales of gasoline, service station sales, during the third quarter of 2001, declined by 5.4 percent on sales of $6.4 billion when compared with third quarter 2000. Service stations have changed over the years from establishments servicing automobiles and selling a variety of auto-related products, to establishments more like convenience stores selling a variety of products not related to autos. The one constant has been that their chief stock-in-trade is gasoline. Recent changes in pay-at-the-pump technology have allowed customers to purchase gas without entering the convenience store. During the third quarter of 2001, service stations experienced a slight increase in sales of gasoline and yet found that their overall sales had declined.

Most other non-durable goods retailers experienced varying levels of growth. For example, restaurants had sales of $9.5 billion, increasing 3.0 percent, while general merchandise stores realized sales of $9.5 billion, an increase of 0.9 percent.

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