Survey of Current Business
December 2018
Volume 98, Number 12

Results of the 2018 Comprehensive Update of Personal Consumption Expenditures by State

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On October 4, 2018, the Bureau of Economic Analysis (BEA) released current-dollar statistics on personal consumption expenditures (PCE) by state for 2017. PCE increased in all states and the District of Columbia. PCE grew 4.3 percent nationwide in 2017, ranging from a low of 2.0 percent in North Dakota to a high of 6.9 percent in Idaho (chart 1).

Additional highlights include the following:

  • Health care and housing and utilities were the largest contributors to growth in PCE.
  • Idaho, Washington, and Utah were the fastest growing states in 2017, with rates of 6.9 percent, 6.1 percent, and 5.7 percent, respectively.
  • Expenditures on gasoline and other energy goods increased for the first time since 2012, increasing 11.7 percent.
  • The release included the comprehensive benchmark update to the PCE by state statistics for 1997–2016.

PCE by state is a household consumption measure that reflects the value of the goods and services purchased by, or on behalf of, households by state of residence. These statistics on households provide an indication of economic well-being as well as information on consumption patterns across states and over time. For example, the statistics show how households allocate their spending between goods and services, or between necessities and discretionary items, or how consumers adjust their spending to changes in the economy.

PCE by state statistics complement BEA’s other regional statistics, including personal income and gross domestic product (GDP), to provide a greater understanding of past and current regional economic conditions.

Nationwide, PCE increased 4.3 percent in 2017, following an increase of 3.8 percent in 2016 (table 1). PCE growth in most states accelerated as well in 2017. Spending on health care and housing and utilities were the largest contributors to the growth in 2017, as they were in 2016. Health care expenditures grew 4.6 percent, while expenditures on housing and utilities grew 4.0 percent in 2017. Combined, both expenditure categories contributed 1.52 percentage points to overall PCE growth nationwide (table 2).

Health care services include spending on physician and dental services as well as hospitals and nursing homes, but the category does not include expenditures on pharmaceuticals (prescription drugs) and therapeutic appliances (such as eyeglasses and contact lenses). Expenditures on pharmaceuticals and therapeutic appliances are captured in the other nondurable goods category and the other durable goods category, respectively. Housing and utilities services include spending on rents for tenant-occupied housing, imputed rents for owner-occupied housing, and utilities, like water supply, trash collection, natural gas, and electricity. The health care and housing and utilities categories accounted for about 35 percent of the total expenditures on PCE at the national level (table 3). The health care category was the largest share of expenditures in 27 states, and the housing and utilities category was the largest share in 23 states.

PCE increased the fastest in Idaho, Washington, and Utah in 2017, increasing 6.9 percent, 6.1 percent, and 5.7 percent, respectively. Spending on health care and housing and utilities were also the largest contributors to growth in Idaho, Washington, and Utah. Additionally, growth in population, current-dollar GDP, personal income, and employment in Idaho, Washington, and Utah outpaced the national average in all four statistics in 2017 (table 4).

Idaho’s economic growth has primarily been driven by growth in manufacturing. In current dollars, manufacturing GDP growth increased 10.1 percent to $8.4 billion dollars in 2017, while employment in manufacturing increased 3.6 percent to 66.1 thousand jobs in 2017. Computer and electronic product manufacturing and food manufacturing have led the way. The south-central region of Idaho has been dubbed the “Silicon Valley of Agriculture or Food,” as several food manufacturers have located their operations in the region. Computer and electronic product manufacturing has primarily been centered around the Boise, ID, area; companies mainly focused on computer chip manufacturing and computer imaging and printing equipment manufacturing call Boise home. The manufacturing sector in Idaho has led the way in creating attractive, highly skilled, highly paid jobs, making Idaho one of the fastest growing states in terms of population, GDP, personal income, and PCE.

Washington’s economic growth has primarily been driven by growth in wholesale trade and retail trade. In current dollars, wholesale trade GDP grew 4.7 percent to $27.3 billion dollars in 2017, while retail trade GDP grew 18.7 percent to $44.6 billion dollars in 2017. Eight Fortune 500 companies are based in the Seattle, WA, area. Six of the eight companies are industry leaders in wholesale and retail trade. These competitive and expanding companies have led the way in Washington by attracting to the state new residents in search of well-paying jobs. In 2017, wages and salaries for wholesale trade grew 5.1 percent to $10.4 billion dollars, while retail trade grew 18.7 percent to $20.4 billion dollars. A healthy economy and population growth have made PCE growth in Washington the second fastest in the nation.

Utah’s economic growth has primarily been driven by growth in professional, scientific, and technical services. In current dollars, professional, scientific, and technical services GDP for Utah grew 8.1 percent to $11.1 billion dollars in 2017. Utah is seeing a flock of small Silicon Valley financial technology (FinTech) companies migrating to the state. Simultaneously, larger traditional financial service firms that have historically existed in Utah have also been taking advantage of the favorable business environment by expanding their scale and operations within the state. The increase of scale and operation from the larger financial service firms and the attraction of FinTech companies have contributed to Utah’s above-average population growth rate. Wages and salaries for professional, scientific, and technical services in Utah experienced an increase of 9.3 percent to $6.9 billion dollars, while employment grew 3.5 percent to a total increase of 147,000 jobs in 2017. Utah’s increasing population, paired with the state’s favorable business conditions, have made PCE growth in Utah the third fastest in the nation.

Nationwide, spending on gasoline and other energy goods increased 11.7 percent in 2017—the first increase in spending in this category since 2012. Gasoline and other energy goods includes spending on motor vehicle fuel and lubricants and heating oil.

While sales of gasoline and heating oil have been declining (chart 2), expenditures on gasoline and other energy goods increased in 2017, after 4 consecutive years of decline. That increase was driven by the average prices of gasoline and heating oil increasing. According to data from the U.S. Energy Information Administration, prices for gasoline and heating oil increased in 2017 after decreasing the previous four periods (chart 3). The growth in spending across states ranged from 5.4 percent in Oklahoma to 16.2 percent in California (chart 4).

The October release of PCE by state included updated statistics for 1997–2016. The updated statistics incorporated the results of the 2018 comprehensive update of the National Income and Product Accounts (NIPAs) and newly available and revised regional source data. Source data that were either revised or newly released include revised data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages for 2001–2016, new 2016 data from the Census Bureau American Community Survey, and revised 1997–2014 data from the U.S. Centers for Medicaid and Medicare Services (CMS) (table 5).

In addition to the new and revised source data, the comprehensive update of PCE by state reflected methodological changes for the housing and utilities category and for the financial services and insurance category.1 The methodological modification to the housing and utilities category removed the effect of utility payments included in the source data for contract rents. The improved methodology for the financial services and insurance category introduced new source data from the Federal Deposit Insurance Corporation (FDIC) and the National Association of Insurance Commissioners (NAIC) as well as from other sources. As a proportion of total PCE, these categories comprised approximately 26 percent of PCE nationwide.

On average, current-dollar PCE nationwide was revised downward 0.4 percent for 1997–2014 (table 6). The revisions ranged from a downward 5.1 percent in Alaska to an upward 7.2 percent in the District of Columbia. Current-dollar PCE was revised downward in 40 states and revised upward in 11 states and the District of Columbia.

The revisions were primarily caused by the new and revised source data and the improved methodologies for the housing and utilities category and the financial services and insurance category. In 2016, Nevada and Alaska had the largest absolute revisions with 7.6 percent and –6.7 percent, respectively. The largest contributors to the revisions in both states were the new and revised source data from CMS and the methodological change for the financial services and insurance category. The CMS data included information about health care expenditures as well as expenditures on pharmaceuticals. The new financial services and insurance methodology incorporated data from several financial sources instead of relying entirely on disposable personal income.

 


  1. See David G. Lenze, “Regional Quarterly Report: Preview of the 2018 Comprehensive Update of the Regional Economic Accounts,” Survey of Current Business 98 (August 2018).