If you are like me, then your favorite end-of-year festivity is making a forecast and a business plan for the New Year. So for the business planner or marketing executive on your list who has everything, the Bureau of Economic Analysis just released its first official statistics on personal consumption expenditures (PCE) by state for 1997-2014.
According to BEA, this data “provides insight into household spending patterns across states and can be used … to gain a better understanding of regional economies.”
If you are a regular reader of this column, then you know that I spend a lot of time trying to identify and report on consumer trends. America has a consumption-based economy — consumer spending accounts for more than two-thirds of the total GDP — and demand for plastics products is driven by growth in the major consumer end-markets.
And you are probably aware that overall growth in consumer spending during this recovery cycle has been sluggish. American households have exhibited more caution and restraint in recent years than they did in most of the previous recovery periods, and the result has been slower-than-average total U.S. economic growth during the past six years.
Yet while the overall rate of recovery in household spending has been subdued, it should not surprise anyone to learn that the pace of growth varies by region and by the type of good or service being purchased. Identifying and then planning for these variances is where this new dataset will be useful to plastics processors.
Most processors manufacture a distinct set of products that are marketed to specific end-markets. And many of these markets (for example, building materials) are regional in nature. So data series that allow for analyses across states and regions of the country are valuable.
For instance, in 2014 the fastest overall growth rates in nominal PCE were in the Far West and the Rocky Mountain regions (note that BEA uses the eight Census Bureau regions for regional comparisons). All of these states experienced nominal spending growth of at least 4 percent last year. Texas and Colorado were the states with the strongest gains in these regions — both were up 5.7 percent from 2013.
It is comforting to know that every state registered a gain of at least 2.1 percent in PCE last year. The state with the slowest growth was West Virginia (2.1 percent) followed by Missouri (2.3 percent) and Kentucky (2.4 percent). Despite the relatively slower growth in these states, their respective growth rates represented acceleration from 2013. On a regional basis, the Southeast and the Great Lakes regions had the slowest gains in 2014.
In terms of end-markets, the largest contributors to growth in PCE in 2014 were housing and health care. Overall spending for housing expanded by 4.1 percent, and the states with the biggest gains were North Dakota (8 percent) and Texas (5.6 percent). The states with the slowest gains in spending on housing were Vermont and Delaware. Total consumer spending for health care escalated 3.9 percent in 2014. The states with the fastest growth were Delaware (7.5 percent) and Hawaii (6.5 percent). The states with the slowest growth in health care spending were Missouri and Kentucky.