California saw a 2.5% decrease in sales tax receipts in the fourth quarter of 2023 compared to the same period in 2022.

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BREA, Calif. (April 16, 2024) — The Golden State closed 2023 with a fourth quarter of year-over-year decline, showing a drop of 2.5% compared to the same period last year, after adjusting for accounting anomalies.

“Despite being the traditionally high-performing quarter, California's local one-cent sales and use tax receipts saw a marked decrease. This decline reflects consumer challenges balancing higher prices and financing costs with essential household needs,” reports Andy Nickerson, President/CEO of HdL Companies, the leading provider of revenue enhancement, technology, and consulting services for local governments.

Sales of general consumer goods faced lackluster results during the holiday shopping period, declining by 3.4%. Home furnishings, women’s apparel, shoes, and electronic-appliance stores experienced the most significant reductions.

The autos and transportation sector, particularly luxury vehicles, experienced a notable 6.2% drop due to higher interest rates, tightened credit standards, and increased inventories. Improved auto leasing activity was the lone bright spot in this sector.

Receipts from fuel and service stations mirrored the overall decline, impacted by lower fuel prices. Recent increases in global crude oil prices suggest growth in this sector over the coming year, indicating a potential reversal of this trend in 2024. 

“Positive news emerged in the form of 1.0% growth in use taxes remitted via countywide pools, marking the first positive rebound after four consecutive quarters of decline,” noted Nickerson. Overall online sales volume remains steady, seeing more taxes allocated directly to local agencies via in-state fulfillment centers and retail outlets. Restaurant sales also remained steady, showing modest 1% growth, with casual dining outperforming fine dining establishments.

“These improvements contrast with the statewide decline of 2.3% over the 2023 calendar year, driven by elevated inflation and interest rates, leading consumers to reassess their spending habits,” Nickerson cautioned. As the Federal Reserve considers a delay in softening rates, HdL Companies anticipates consumer spending may continue to stagnate, delaying a return to normal historical growth trends in 2024.

Each quarter, HdL Companies reports on California’s sales tax receipts and impacts on local jurisdictions.

 
Statewide - All Data 4Q 2023 4Q 2022 % Change
Autos & Transportation 341,403,246   363,731,992 -6.1%
Building & Construction  182,818,089  185,811,966 -1.6%
Business & Industry 409,199,908  419,040,442  -2.3%
Food & Drugs 107,717,227  114,917,007  -6.3%
Fuel & Service Stations  194,047,449 205,745,017  -5.7%
General Consumer Goods  437,784,109 452,769,155  -3.3%
Restaurants & Hotels  290,146,302 287,446,755  0.9%
County & State Pools  5,482,196 4,863,031  12.7%
Transfers & Unidentified  448,019,986 443,716,712  1.0%
TOTAL  2,416,618,513 2,478,042,078  -2.5%

View a complete table of sector and regional data.

 

 

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