Geographic variations in consumption

Gradually rising over time, personal consumption expenditure (PCE) now accounts for almost 70 percent of GDP. While we have been able to track the changing composition of the PCE as services have grown as a proportion of total expenditures,¹ there was no source of official data at the state level until the August 2014 release of “Personal consumption expenditures by state, 1997–2012.”²

Averaging $35,498 across all states, PCE per capita varies from a high of $59,423 in the District of Columbia to a low of $27,406 in Mississippi (see figure 1). Because personal consumption is dependent on more than personal income—including factors such as state price differentials, demographic distribution, and geographic situation—the variations in state PCE shown in figure 1 differ from the variations that are seen in state personal income per capita. For example, while Hawaii ranks 21st in personal income per capita, it ranks 47th in PCE per capita; Vermont ranks 22nd in personal income per capita but 10th in PCE per capita.

This new dataset allows for an exploration of variation in the types of spending among the states. While the press release points out variations in absolute dollars spent on different categories, it is also interesting to consider the proportion of PCE going to a particular category. For example, the Bureau of Economic Analysis reports that per capita PCE for housing and utilities was highest in 2012 in the District of Columbia ($11,985), followed by Hawaii ($10,002), Connecticut ($9,524), and Maryland ($9,000). Per capita expenditures were lowest in Mississippi ($4,294), followed by Texas ($4,391), Arkansas ($4,500), and West Virginia ($4,536). However, if we look at the per capita PCE for housing and utilities on a proportional basis, we see that Hawaii spent the highest proportion of per capita PCE on this category (33.2 percent), followed by California (23.3 percent), Maryland (22.0 percent), and Nevada (21.6 percent). Proportional per capita expenditures were lowest in North Dakota (12.4 percent), followed by South Dakota (13.6 percent), Texas (13.6 percent), and Michigan (14.8 percent).

The press release also notes that per capita PCE for health care was highest in 2012 in the District of Columbia ($10,491), Massachusetts ($8,816), Alaska ($8,173), and North Dakota ($7,785). They were lowest in Nevada ($4,253), Utah ($4,311), Idaho ($4,695), and Georgia ($4,737). However, when we consider the proportional rankings, we find that West Virginia spent the highest proportion of per capita PCE on health care of any state (20.8 percent), followed by Ohio (19.7 percent), Alaska (19.6 percent), and Wisconsin (19.6 percent). At the other end of the spectrum was Virginia (13.8 percent), followed by Colorado (14.2 percent), Utah (14.3 percent), and New Jersey (14.4 percent).