Spooked consumers made for the loneliest holiday shopping season in years, and a report last week showed North San Diego County retailers faring slightly worse than their counterparts across California.

Taxable retail sales in the last quarter of 2008 came in 13 percent below the last three months of 2007 in North San Diego County's nine cities, according to an analysis of sales-tax data from the HdL Companies, a consulting group. That compares with a statewide decline of 10 percent, according to the group.

Most other states' economies have fared slightly better, and a separate report Friday showed that U.S. consumer spending rose for a second straight month in February after six months of declines.

In North County, retail spending began to sag in late 2007 and collapsed more dramatically following the unprecedented collapses of Wall Street firms in September and October. The HdL report Friday showed retailers in the nine cities taking in a total of $11.1 billion in 2008, down 7 percent from 2007.

Those figures include sales of most goods, but exclude food and most services, which are not taxable. Data last week from the U.S. Commerce Department showed service businesses faring somewhat better in the recession, but the consumer sector as a whole has fallen markedly since last spring.

Retail sales fell particularly steeply in cities with large clusters of car dealerships. Total retail sales fell 10 percent last year in Escondido, to $2.43 billion. Poway's sales fell 12 percent, to $1.01 billion. Sales in Carlsbad fell by a modest 7 percent, to $2.31 billion.

Similar trends have emptied storefronts across Southern California and raised the specter of higher tax rates in several cities facing large budget deficits.

City governments typically receive 1 percent of retail sales that occur within city limits. Cities can opt for higher rates; Vista, and several other cities in San Diego County have done so.

Escondido Councilwoman Marie Waldron sought the council's pledge earlier this week that it wouldn't attempt to raise sales taxes. Other council members haven't attempted that, but they

voted 4-1 to keep it as a last resort.

In Chula Vista, where foreclosures and falling retail sales have eroded both sales tax revenue and property revenue, city officials have broached the issue more directly.

Regional economist Marney Cox said sales tax hikes appear to have diverted very little business to neighboring cities and counties. But California will soon add 1 percentage point to the statewide sales tax, bringing the total rate in most cities to 8.75 percent. Further hikes would push the rate to nearly 10 percent, a dispiriting threshold similar to $4 gallons of gas that prompted drivers to stay home last summer, Cox said.

"You hit that ceiling, and residents find a way to not pay that tax," he said.

Retail sales in Temecula, Murrieta and Lake Elsinore -- Riverside County communities where the real estate bust has slammed large number of furniture and home goods stores -- fell 11 percent last year to $3.9 billion, according to HdL. A report from the consultancy showed retailers elsehwere in Riverside County faring even worse.

Bruce Coleman, Murrieta's economic development director, noted that the recession has emptied half of a large new furniture mall off of Interstate 215. In response, Murrieta's city government to other retailers in January. Coleman said the city is encouraging a fast-casual restaurant to locate there.

Cox said he foresees cities and landlords in San Diego County easing restrictions on where retailers can locate.

Sepearately, the Commerce Department reported Friday that consumer spending rose in February for a second straight month, raising hopes that the nation's economy is no longer in free fall.

Consumers' spending had grown faster than their incomes for about 15 years, but its sudden and sharp downturn has pushed the economy deep into a recession, economists have said. The downward trend has been particularly stark in suburban areas where the real estate boom had motivated homeowners to spend more in the first half of this decade.

Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com. Read his blogs at http://bizblogs.nctimes.com.

See also:

ECONOMY: Consumer survey showed growing debt preceded crash (Feb. 24, 2009)

SAN DIEGO COUNTY: Sales slump deeper in suburbs (Dec. 22, 2008)

RIVERSIDE COUNTY: Spending slump deeper in suburbs (Dec. 22, 2008)