The annual data on state-level Personal Consumption Expenditures (PCE) were published last week by the Bureau of Economic Analysis. The data for Arkansas reaffirm our observation that Arkansas consumers maintained relatively high levels of spending during the depths of the pandemic. Nationwide, PCE declined 2.6% from 2019 to 2020. In Arkansas total spending increased–albeit at a rate of less than 0.1%. Arkansas was one of only four states to show an increase for the year. (The other states were Idaho, Utah and Montana.)
The brunt of the slowdown was borne by services consumption. With opportunities for spending on services severely limited by pandemic-related closures and lockdowns, consumer spending was diverted toward consumption of goods. In both the national and Arkansas data, goods consumption increased in 2020. However, the percent increases were larger for Arkansas in each category of spending. Two categories of goods—Other durable goods and Gasoline—were lower for the year, but the declines were smaller in the Arkansas data. Similarly, the declines in services consumption were generally much larger for the U.S. than recorded in the Arkansas data. The only exception was Health care, which increased slightly more in the national data than in Arkansas.
One reason for the overall relative strength in the Arkansas statistics is the fact that goods consumption has historically comprised a larger share of total spending in Arkansas. This larger share of goods-consumption had the effect of boosting the impact of increased spending on goods and de-emphasizing the declining service-sector spending. However, this effect was small: If the sector-by-sector growth rates for Arkansas were re-weighted to reflect the higher service-content of the U.S. consumption basket, Arkansas growth rate for the year would be around -0.1%, instead of +0.1%.