Experimental Quarterly State PCE Statistics
The U.S. Bureau of Economic Analysis' (BEA's) annual statistics on personal consumption expenditures (PCE) at the state level provide critical insights into households' consumption. However, they are produced with a 10-month lag and do not always capture important nuances. To address this, BEA has been developing quarterly state-level PCE statistics to yield timelier and more complete information.
A recent working paper by BEA researchers outlines the methods and data sources used in this effort, along with preliminary results. The authors employ a variety of data sources, adjust them to align with BEA's concepts and framework, and use them as indicators to interpolate and benchmark the quarterly estimates to both annual PCE by state and national quarterly PCE statistics. These quarterly state-level PCE statistics, were they to be produced regularly, would complement BEA's state quarterly gross domestic product (GDP) and state quarterly personal income statistics to provide a more comprehensive and timely view of the state economies.
Chart 1 illustrates the importance of quarterly spending information by comparing the percent change in annual and quarterly PCE statistics in BEA's National Income and Product Accounts over a period that includes the effects of the COVID–19 pandemic. While the annual PCE statistics indicate an overall drop in consumption for 2020, the quarterly statistics reveal a considerably more complex picture, highlighting a sharp decline in consumption during the second quarter of 2020, followed by a rapid recovery in the third quarter. This contrast demonstrates how quarterly data can capture short-term fluctuations and trends that are not evident in annual statistics.
PCE is a broad-based, National Economic Accounts spending concept that contrasts with other, narrower measures of money-based consumer spending. Accounting for nearly 70 percent of the nation's GDP, it plays a critical role in driving future economic growth and is closely monitored by businesses and policymakers. At the state level, PCE is an important indicator of state economic growth and the well-being of households in each state.
The experimental quarterly state-level statistics show a divergence between income, consumption, and GDP trends during and after the COVID–19 pandemic, as depicted in chart 2. This divergence reflects changes in production and consumption patterns associated with shutdowns and stay-at-home orders as well as the impact of various federal pandemic response programs. The comparison across states also highlights variation in the timing of the PCE decline and subsequent recovery. For instance, New York experienced a sharp decline in both PCE and GDP, while Utah experienced only a mild decline and quickly recovered. Post recovery, PCE exhibited faster growth in Utah, while in Texas, GDP growth surpassed that of PCE.
The authors note that the paper's experimental statistics represent only a first step. Budget and other resources permitting, BEA hopes to continue developing official quarterly PCE by state statistics. The results so far demonstrate the new statistics, when combined with quarterly GDP and personal income measures, can offer valuable insights to better understand state economic conditions, assess the impact of policy, and make informed decisions. BEA is actively seeking input from data users and subject-matter experts regarding the data sources, methods, and the experimental results presented in the paper.
