Consumer spending spree

A robust construction industry, and shoppers eager to outfit their homes with the latest tile and furniture, fueled an estimated 10 percent gain in retail sales for Spokane County last year.

Eastern Washington University economists are optimistic that the positive trend will continue, with 2007 bringing another 6 percent gain in overall retail sales. North Idaho is also looking good, with a state economist predicting retail sales growth topping 5 percent.

Once-vacant storefronts in downtown Coeur d’Alene and Spokane are filling with shops while malls are attracting new national retailers, such as Steve and Barry’s University Sportswear, Kohl’s and J. Jill.

A number of positive factors are converging to create a thriving retail trade, including a rapidly growing population, a booming construction trade, modest income growth and an unemployment rate that’s uncommonly low for the region.

Unemployment is hovering below 5 percent for the combined Spokane and Kootenai County region.

“Historically, we’ve been as high as in the sevens. To have this steep decline in the unemployment rate is a very positive phenomenon,” said Patrick Jones, executive director of Eastern Washington University’s Institute for Public Policy and Economic Analysis.

The Institute’s Web site ( www.ewu.edu/x4901.xml) is devoted to analyzing the economic health of the region and includes a report by EWU Economics Professor Grant Forsyth, forecasting economic trends for 2007. The report said that Spokane and Kootenai counties grew at 1.9 percent for 2005 — which is almost twice as fast as the national average — and predicted that 2006 would nearly rival that growth.

In North Idaho, population growth, gains in tourism and Canadians crossing the border to shop will continue to fuel retail growth, said Kathryn Tacke, regional economist for Idaho Commerce and Labor. She anticipates that Cabela’s, which is slated to be built in Post Falls, will also have a positive impact.

“I think we should continue to see above 5 percent growth for the communities up here,” Tacke said.

A significant slowdown in residential construction could affect retail sales growth, she added.

Jonathan Coe, president and general manager of The Coeur d’Alene Area Chamber of Commerce, said some people moving into the area are packing full bank accounts after selling homes in more expensive housing markets.

“It becomes somewhat of a retail bonanza for us,” Coe said.

Although new-home starts are down, which negatively impacts retail sales, tourism is up, he said. Tourism, which plays a major role in Coeur d’Alene’s economy, was strong this past summer, Coe said, and he’s hopeful that winter will finish well because ski hills opened early.

The greater Spokane area can also look forward to additional tourist spending, as the expanded convention center is up and running.

However, some businesses will likely face challenges this year. Motor vehicles and parts are the top category by volume of taxable retail sales, topping $829 million for Spokane County. The auto industry, particularly Ford Motor Co. and General Motors, have experienced downturns in sales. Despite indicators that new-car sales may decline, Jones is hopeful that population growth will help bolster sales. The businesses are major contributors economically, he said.

Anecdotally, it appears that some independent retailers are finding their niche in competing against chain stores. Seven years ago downtown Coeur d’Alene was dotted with empty storefronts, Coe said, and today those spaces are filled with mostly local shops and restaurants.

“In the last two or three years, we’ve seen close to a 100 percent occupancy rate.”