The Bureau of Economic Analysis reported today that Personal Consumption Expenditures (PCE) rose by 4.3% in 2017, matching the nationwide growth rate. PCE is not adjusted for inflation, so after accounting for a 1.8% increase in prices from 2016 to 2017, real PCE increased by about 2.5%. From 2011 through 2015, Arkansas PCE growth ran slightly slower than the national average. In 2016 and 2017, Arkansas growth rate has kept pace with the rest of the nation.
The fastest-growing components of PCE in 2017 were Gasoline and other energy goods; Financial services and insurance; and Health care. The gasoline and health care components were cited in the BEA report as being leading factors for growth in most states. Notably, there were no components of spending that declined in 2017.
Per Capita PCE
On a per capita basis, PCE growth in Arkansas was 3.7%, slightly higher than the 3.6% national growth rate. At $32,875, per capita spending in Arkansas amounted to approximately 80% of the national average. Among the 50 states plus the District of Columbia, Arkansas ranked #49 in terms of the level of PCE per capita. The only major component for which Arkansans spend more per person than the nationwide average is on Motor vehicles and parts. At the other extreme, spending on Transportation services amounts to less than one-half of the per capita level nationwide.
Spending shares by component follow a familiar pattern: Arkansans devote a larger share of their budgets to purchases of goods (which tend to display small inter-regional differences in price) and a relatively smaller share on services (for which prices are more closely related to Arkansas’ status as a low cost-of-living state).