Monday, December 7, 2015

Conspicuous Consumption?

New data shows Utah’s personal consumption expenditures increased in 2014 

By Lecia Parks Langston, Senior Economist

“Don’t tax my income, tax my consumption.” Bill Gates

Recently, the U.S. Bureau of Economic Analysis released its first set of official personal consumption expenditures data for states. More commonly referred to as “consumer spending,” this data adds another indicator to our arsenal of economic analytics. Just what are personal consumption expenditures? They represent goods and services purchased by (or in behalf of) households. These expenditures represent a two-thirds piece of gross domestic product pie and are often the driver of growth in the economy. Yeah, they are kind of important.

The following visualization provides personal consumption expenditures data for the U.S. and all 50 states from 1997 to 2014. However, let’s be honest, we’re primarily interested in our own little corner of the world. So, what do the data tell us about the Utah economy?

• Between 2013 and 2014, Utah’s personal consumption expenditures grew by 5.3 percent registering the fifth-fastest growth rate in the country. Overall, U.S. expansion measured 4.1 percent.

• In 2013, Utah showed the second-fastest personal consumption expenditures growth in the nation, second only to oil-booming North Dakota.

• On a per capita basis, 2014 expenditures grew at a somewhat slower rate (3.8 percent) thanks to strong population growth in the Beehive State. Utah’s growth rate ranking dropped to 11 when per capita expenditures are compared.

• Since the beginning of the recovery in mid-2009, Utah’s expenditures have shown strong expansion. Nationally, growth has also improved although the rate of growth peaked in 2011.

• Not surprisingly, both Utah’s total and per capita expenditures dropped dramatically during the recession.

 • In the current expansion, neither Utah nor the U.S. has exhibited personal consumption expenditures growth rates equal to the previous boom. However, the level of expenditures has far surpassed the pre-recession figures.

• A large population under the age of 18 contributes to a lower-than-average per capita expenditure figure for Utah ($32,400 in 2014).

• Rapidly growing Utah expenditure categories included recreational goods/vehicles and food services/accommodations in 2014.

• Low gasoline prices contributed to a 2 -percent drop in 2014 total gasoline/energy expenditures in Utah.

• During the recession, Utah’s health care per capita personal consumption expenditures increased — the only category to do so.

• Durable goods (those with at least a three-year lifespan) experienced the sharpest Utah personal consumption expenditures declines during the last recession. In particular, big-ticket motor vehicle purchases plummeted.

• Although Utah per capita expenditures for housing/utilities and recreation services decreased during the economic downturn, total expenditures did not.

• Currently, housing and utilities account for 19 percent of Utah per capita expenditures. • Since 1997, Utah per capita expenditures for most categories have maintained a relatively steady share of the total.

• Health care showed the largest increase in expenditure share, rising from 11 percent of total per capita expenditures in 1997 to 14 percent in 2014.

• Motor vehicles/parts expenditures show the largest per capita expenditure-share decline, falling from 6 percent in 1997 to 4 percent in 2014.

• Per capita expenditure shares in food for off-premise use, furnishings, clothing/footwear, and transportation services have declined slightly since 1997.

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