Economist Mervin Jebaraj says sales tax collections during the brunt of the COVID-19 pandemic indicate a spike in liquor store sales, while bar revenue plummeted.
Analyzing state and local data, Jebaraj, director of the Center for Business & Economic Research at the UA Walton College of Business, says the shift in points of sale suggests consumption did not drop much.
“Between March and November – we only have data up until November so far — bars saw about 33% less in sales tax collections. Whereas liquor stores during that same time period saw 28% more in sales tax collections,” he said.
“It’s not necessarily that it’s a consumer preference that is independent of the pandemic where people are drinking or buying at liquor stores and drinking at home versus bars. It’s really about consumer safety. Consumers are less willing to be in bars without a mask on,” Jebaraj noted. “Whereas they’re more comfortable going into a liquor store with a mask on… or getting it through the drive-through.”
Restaurants that serve alcohol have fared better than bars, but not as well as liquor stores, the data reflects.
“We looked at restaurants, full service restaurants are doing better than bars. They’re still doing about 10% to 11% less than sales tax collections between March and November,” he said.
Jebaraj also offered insight on the recent Arkansas jobs report, which shows unemployment fell from November to December by two percentage points to 4.2%. Jebaraj said he expects a revision upward for that number as correlating data from other reports doesn’t suggest as large of a decline.
“Seeing a two percent drop in the unemployment rate and a dramatic increase in the number of unemployed people on that household survey – something like 38,000 unemployed people from November to December – runs counter to the data we got from the national survey where we saw employment drop between November and December. And it runs counter to the state level payroll data that we saw between November and December… where it looks like we’ve only added 3,500 jobs, not 35,000 jobs” he said.
“While I’d love to celebrate a dramatic drop in the unemployment rate, I’m going to hold off and fully expect the BLS [U.S. Bureau of Labor Statistics] will revise that rate up whenever they get the corrections in the next release,” he added.
You can watch Jebaraj’s full interview in the video below.