Global| Oct 03 2019Consumer Spending by State
|in:Viewpoints
Summary
BEA has released estimates of current-dollar consumer spending by state for calendar year 2018, along with revised figures for earlier years. It's useful to keep in mind what these figures are and are not: 1. As noted, they are annual [...]
BEA has released estimates of current-dollar consumer spending by state for calendar year 2018, along with revised figures for earlier years. It's useful to keep in mind what these figures are and are not:
1. As noted, they are annual estimates, released with some considerable lag.
2. They are estimates of overall consumer spending, not for instance, retail sales. Anybody interested in seeing how these numbers may help explain, say, state sales tax revenues, will need to make considerable adjustments. For example, the largest single component of consumer spending is owners' equivalent rent, which is not subject to sales tax!
3. In many categories, initial estimates of state consumer spending are assumed to be tied to growth in compensation in a corresponding retail store type—obviously, a somewhat questionable assumption, though it is hard to come up with a better alternative.
In per capita terms, DC far and away leads the nation, with an estimated $63,151 in consumption per resident in 2018. This clearly is linked to high housing costs in the nation's capital. Massachusetts is number one among true states, at $55,095. Other high-housing cost Northeastern states are in the top ranks, including New Jersey and New York (property tax payments will enter into the consumed portion of rent). Two very high cost states to live in—Hawaii and Alaska--are high in the ranks, as are North Dakota, Minnesota, and Vermont. Minnesota ranks high because spending on many services is estimated to be high. Vermont also reports high spending on services, but it's interesting to see that both the Green Mountain State and North Dakota show unusually high spending levels on goods. It may be the case that compensation of retail employees is unusually high in both places (certainly, the shale boom could have produced that situation in North Dakota), and this is reflected in high estimates of spending on many goods.
On the low side, unsurprisingly poorer states are in the bottom grouping, with Mississippi the lowest, at $31,083.
Charles Steindel
AuthorMore in Author Profile »Charles Steindel has been editor of Business Economics, the journal of the National Association for Business Economics, since 2016. From 2014 to 2021 he was Resident Scholar at the Anisfield School of Business, Ramapo College of New Jersey. From 2010 to 2014 he was the first Chief Economist of the New Jersey Department of the Treasury, with responsibilities for economic and revenue projections and analysis of state economic policy. He came to the Treasury after a long career at the Federal Reserve Bank of New York, where he played a major role in forecasting and policy advice and rose to the rank of Senior Vice-President. He has served in leadership positions in a number of professional organizations. In 2011 he received the William F. Butler Award from the New York Association for Business Economics, is a fellow of NABE and of the Money Marketeers of New York University, and has received several awards for articles published in Business Economics. In 2017 he delivered Ramapo College's Sebastian J. Raciti Memorial Lecture. He is a member of the panel for the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters and of the Committee on Research in Income and Wealth. He has published papers in a range of areas, and is the author of Economic Indicators for Professionals: Putting the Statistics into Perspective. He received his bachelor's degree from Emory University, his Ph.D. from the Massachusetts Institute of Technology, and is a National Association for Business Economics Certified Business EconomistTM.