BEA’s New Statistical Product Enriches Understanding of Consumer Behavior at the State Level

On August 7th, the Commerce Department’s Bureau of Economic Analysis (BEA) will premiere a new report on consumer spending, “Personal Consumption Expenditures by State.” This represents a major advancement in the level of information available on consumer spending behaviors at the sub-national level. Why is it important? Because consumer spending is a major driver of the U.S. economy’s overall health.

BEA already reports national numbers, but not state-by-state statistics.  This greater level of detail will provide a much richer economic picture of the nation. This new statistical product also and importantly demonstrates the Commerce Department’s data commitment outlined in our recent Strategic Plan.  As ‘America’s Data Agency,’ we have pledged to transform Department data capabilities and capacity; to enhance the value, accessibility and usability of Commerce data for government, business and the public.

Personal Consumption Expenditures (PCE) by State is a broad measure of household spending. The new statistics will reflect variation in both the goods and services purchased by households and the relative prices of these goods and services across regions. The annual report will cover data from 2012 back to 1997.  It is a “prototype statistic,” meaning that refinements in methodology may be made before this becomes a “regular” BEA product.

PCE by State promises to yield great value in many ways, including providing a clearer indication of how households in various regions fare in recessions and recoveries. Such statistics will yield insights on a wide range of questions, such as what categories of consumption decline the most in specific states and how the growth rates of consumer spending compare with the growth rates of disposal personal income. The new report will also and importantly help inform decision making by businesses in hiring, investing and locating a company.

Other important potential uses of the new data:

  • They can be used by state governments to analyze the potential revenue impact generated from various sales tax proposals.
  • They can be used for cross-state comparison of the impact of fiscal policy choices on household spending.
  • They can be used to improve the regional input-output models developed by regional economists in state governments and academia.
  • They can be used to assess purchasing power potential for marketing.
  • Finally, the new statistics can be used to provide an indication of the general well-being of households in a state economy.

These experimental PCE by State statistics are designed to be used in conjunction with other macroeconomic and regional data produced by BEA. Given the limited availability of source data at the regional level, the new PCE by State statistics will not provide the same level of category detail that BEA currently makes available at the national level. The 16 categories prepared for these new statistics correspond to the categories in table 2.3.5 in the national income and product accounts.

And there are more exciting changes coming in the data provided by our statistical family: on Aug. 20th, BEA will release another new product – “Quarterly Gross Domestic Product (GDP) by State.”  BEA currently produces this indicator on an annual basis; beginning this month, it will produce these figures for the first time on a quarterly basis – in essence providing states with a real-time look at the growth or contraction of their state-wide economy.  After getting feedback on this prototype measure, BEA will move to producing quarterly GDP by State statistics on a regular basis.

Mark Doms, Under Secretary for Economic Affairs

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