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Retail Sales for '94 Set O.C. Record : Consumers: Spurt of long-delayed buys sent taxable sales up 5.4% to top $28 billion. Economists say this year will be even better.

October 20, 1995|JOHN O'DELL and DAN MARGOLIS | SPECIAL TO THE TIMES

Undeterred by a stagnant regional economy and the county government's year-end financial troubles, Orange County consumers dug deeply into their pocketbooks in 1994 to make the year the best on record for retail spending.

Led by a spurt of long-delayed purchases of office equipment, home furnishings, appliances and automobiles, taxable sales in the county jumped 5.4% to an all-time high of $28.28 billion, the state Franchise Tax Board reports.

"They are buying like it was the '80s again," said Steven V. Ramenofsky, manager at Gary's & Company, a Newport Beach men's clothing store. He said he racked up $3,200 in sales Thursday morning to just three customers--all stockbrokers who "seemed real confident where the economy was going."

The momentum from last year has carried over to 1995, said Ramenofsky, who called his store's September sales total "incredible."

Economists say that the 1994 buying binge was expected after three years of recession, and that this year should be even better.

Pent-up demand is one reason, but the economy also was fueled by employers in the county who added several thousand jobs to their payrolls last year after two years of decline, said Esmael Adibi, director of the Chapman University Center for Economic Research, which publishes annual economic forecasts for Orange County.

The trend is expected to continue. Chief economist Lynn Reaser at First Interstate Bank this week predicted that Orange County employers would add nearly 65,000 new positions in 1996 and 1997. Additional hiring would boost personal incomes and spur even more retail buying.

"We're expecting a 6.2% increase in taxable sales this year," Adibi said.

Last year was especially significant because it marked the first time since the 1990 recession that retail sales growth in the county outpaced the inflation rate. "Inflation was only about 2.2%, so we had real growth for the first time in years," Adibi said.

It also was the first time since 1990 that taxable sales in Orange County outpaced the state average, which the tax board pegged at 5.2%. Local retailers also outdid their counterparts in Los Angeles and San Diego counties, where retail sales grew by 5.3% and 3.7% for the year.

One solid signal that an economic recovery is on the way was the 20% increase in spending last year on boats, private airplanes and motorcycles, which generally are considered to be big-ticket luxury goods that move only when people have dollars left over after they pay for the necessities.

"We are seeing people free up their money again," Ray Jones, president of Long Beach Yacht Sales, said in an interview from his Newport Beach store.

Not only are yachts with $500,000 price tags selling to the wealthy, but the county's average Joes and Jills are lining up to purchase less expensive water toys on installment contracts, he said. It's a signal that people have renewed confidence in the stability of their jobs.

Consumers also binged on home furnishings and appliances last year. Sales rose about 11% to $1.02 billion as people found themselves with a few dollars to spare for the first time in nearly half a decade.

The good news in the itemized annual figures was underscored recently when the Franchise Tax Board released a preliminary report on gross retail spending totals for the first quarter of 1995. Orange County once again outpaced the state and its biggest neighbors with a 5.3% increase from the first three months of 1995.

The annual sales tally is released so late because of the time it takes researchers to itemize dozens of categories of retail spending by city and county.

Retail sales are a key indicator of the direction in which the entire economy is moving. They not only reflect the mood of consumers, but help manufacturers predict and gear up for future demand.

So if new car sales climb--which they did in 1994 after several years in a slump--the rise can generate increased hiring in the industry, from auto manufacturers in the Midwest to Orange County's wealth of aftermarket equipment makers, auto dealerships and repair shops.

The automotive business, including sales of gasoline, is the largest single retail category in the state. In Orange County last year, automotive retailing rose by 4.1% to nearly $4.3 billion--15.2% of all taxable retail sales.

Sales of used cars posted a sizable gain. "Our used car sales are up 60%," said Jim Klein, owner of County Wide Chrysler-Jeep in Garden Grove. "I think people feel a lot better about Orange County."

And car sales aren't even the most important part of the retail market. "Look at demand for specialty items" such as art works, sporting goods, jewelry and office supplies, said Chapman University's Adibi. Sales in that category rose almost 10% to $3 billion last year, "and that's significant because a lot of those things are made here, so more sales adds more jobs."

"That how an economy should work."

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Taxable Sales Still Climbing

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