The Golden State showed moderate gains in sales tax receipts in the third quarter of 2022, reporting an overall 8% increase in sales and use tax from July through September, compared to the same period in 2021. The returns reflect another period of solid growth for California’s economy.

“As the Federal Reserve Board continued ramping up interest rates in an effort to curb concerns over inflation, consumers continued purchasing a broad array of goods, especially new automobiles,” stated HdL Companies President/CEO Andy Nickerson. HdL is the leading provider of revenue enhancement technology and consulting services for local governments. Each quarter, it reports on California’s sales tax receipts and impacts on local jurisdictions.

The automobile sector saw growth of 6% with new car dealers experiencing 10% gains compared to 2021. Limited inventory

hybrid carsand demand for higher mileage vehicles, including electric and hybrid models, supported the growth. “Increased costs for used cars have diverted consumers into the new car market, continuing the vehicle industry boom that started during the pandemic. Meanwhile, recreation vehicle sales and auto leasing remained soft,” Nickerson commented.

For Californians, the summer of 2022 made for the highest gas prices on record, lifting fuel and service station receipts by 21%. Commuters and summer travel remained steady while overall fuel consumption trails pre-pandemic levels by approximately 13%. For the second straight quarter, fuel sales linked to discount department stores propped up general consumer goods results. Otherwise, retailers experienced flat to decreased sales as many apparel categories, home furnishings, and sporting goods struggled to keep pace with the prior year.

restaurant menus“The restaurant and hotel sector experienced an uptick of 10% due to increased menu prices, a sustained thirst for dining out and strong tourism,” noted Nickerson. Theme parks, leisure-entertainment venues, and hotels showed positive momentum, guiding the sector back to 2019 levels.

Contractors and plumbing-electrical suppliers boosted the building and construction sector to gains of 8% with solid residential and commercial housing prices persisting despite interest rate hikes. Tenant improvements also supported further spending activity for this segment.

“Sustained price increases and interest rate hikes have consumers contemplating where to spend their dollars but historically low statewide unemployment rates and the recovery of the national stock markets from recent declines leave modest optimism heading into 2023,” concluded Nickerson.

Statewide – All Data 3Q 2022 3Q 2021 % Change
Autos & Transportation 367,304,975 347,097,771 5.8%
Building & Construction 203,873,099 188,880,029 7.9%
Business & Industry 367,912,765 335,586,522 9.6%
Food & Drugs  104,534,329 104,311,462 0.2%
Fuel & Service Stations 228,375,172 187,695,519 21.7%
General Consumer Goods 372,878,631 362,817,235 2.8%
Restaurants & Hotels 283,233,566 257,144,012 10.2%
County & State Pools 417,649,094 388,769,101 7.4%
Transfers & Unidentified  2,598,574 2,676,398 -2.9%
TOTAL  2,348,360,205 2,174,975,050  8.0%