Pa. consumer spending up 11 percent post-recession

  • Associated Press
August 11, 2014

Pennsylvania consumers bought more cars and trucks and boosted their spending in other areas as the nation emerged from the recession.

Economic data released Thursday by the U.S. Department of Commerce provides a look at how consumers responded in the years after the Great Recession officially ended in 2009.

It is a new annual report that, for the first time, reveals consumer spending on a state-by-state basis from 1997 through 2012. It covers household spending on food, gas, housing, utilities, health care and other items.

The numbers point to substantial shifts in the economy since the recession, which began in December 2007 and officially ended in June 2009.

Consumer spending in Pennsylvania rose about 11 percent, or $3,700 per person, between 2009 and 2012, slightly exceeding the national average for spending growth. It was in the middle of the pack among the 50 states, placing 25th.

Things were much different in North Dakota. Enriched by an oil boom, residents stepped up their spending at triple the national pace from 2009 to 2012. It jumped 28 percent, ahead of Oklahoma at 16 percent. The next-largest increases were in South Dakota, Texas and West Virginia (13.8 percent).

In Nevada, smacked hard by the housing bust, consumers barely increased their spending.

Americans spend the most, per person, on housing in Washington, D.C., and the least in West Virginia.

Though Pennsylvania consistently lags in job growth, the state’s concentration of relatively stable jobs in health care, higher education and pharmaceuticals – especially around Pittsburgh and Philadelphia – helped drive consistent gains in spending, said Michael F. Smith, a Temple University professor who specializes in consumer behavior and retail spending.

An aging population also means that Pennsylvania consistently spends a lot on health care: $87 billion in 2012 alone, according to the government data released Thursday. With the fourth-oldest population in the country, Pennsylvania spent more on health care than on anything else, even housing, the report said.

Pennsylvania consumers spent about $16.7 billion on cars, trucks and auto parts in 2012, an increase of 24 percent over 2009, reflecting pent-up demand and aggressive marketing by auto dealers.

“As the economic outlook was starting to brighten, the automobile companies have been very aggressive with promotions and financing,” Smith said. “That’s part of what is moving this along. If you can’t afford a house, one of the things you may be able to afford is a new car.”

Consumer spending in Pennsylvania slowed dramatically in 2012, the latest year for which data are available, rising 2.8 percent. Pennsylvania ranked No. 38 that year.

The changes in spending patterns in North Dakota have been particularly dramatic. Its per-capita spending in 2007, before the recession began, was $32,780. That ranked 24th among states.

By 2012, North Dakota’s per-capita spending was $44,029, fourth-highest nationwide. (The figures aren’t adjusted for inflation.)

North Dakota has boomed in large part because of hydraulic fracturing, or “fracking,” that has unlocked vast oil and gas reserves.

The state’s per-person income soared 37.2 percent, before inflation, from 2009 through 2012, according to a separate report released this year. That’s by far the most for any state.

North Dakota’s unemployment rate was 2.7 percent in June, the lowest in the nation.

By contrast, spending eked out a scant 3.5 percent increase in Nevada, the weakest for any state and far below the 10.7 percent national average. Arizona’s 6.2 percent increase was next-weakest, followed by Hawaii’s, Florida’s and Utah’s.

When the housing bust struck in 2006, home values plummeted in Nevada, Arizona and Florida. The persistently weak consumer spending in those states underscores the lingering damage the housing bust inflicted on their economies.

Nevada and Arizona also received the smallest income gains in the first three years after the recession ended. Salaries and other income in Nevada rose just 3.8 percent and only 6.7 percent in Arizona. The national average was 11.1 percent.

And Nevada’s unemployment rate was 7.7 percent in June, the third-highest. Arizona’s was 6.9 percent, 10th-highest.



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