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Comments by Therese J McGuire Northwestern University

Personal Consumption Expenditures by State Christian Awuku-Budu , Ledia Guci , Christopher Lucas and Carol Robbins BEA Advisory Committee Meeting May 10, 2013. Comments by Therese J McGuire Northwestern University. Useful venture for a number of reasons. Assess state tax reform proposals

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Comments by Therese J McGuire Northwestern University

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  1. Personal Consumption Expenditures by StateChristian Awuku-Budu, LediaGuci, Christopher Lucas and Carol RobbinsBEA Advisory Committee MeetingMay 10, 2013 Comments by Therese J McGuire Northwestern University

  2. Useful venture for a number of reasons • Assess state tax reform proposals • Assess state tax performance • Measure the wealth effect on consumption • Undertake regional market analysis • Improve regional input-output tables

  3. Painstaking work • Create annual, state-level expenditures for 77 categories of PCE over period 1997-2007 • Benchmark against various external sources • Correct for residency of purchaser (cross-state purchases) • Provide and interpret initial results on differences across the states in 15 aggregated expenditure categories, including 7 service categories

  4. Questions that came to mind • Are the outlier states truly outliers that need to be adjusted or do they present interesting variation? • Do the big states – California, New York, Illinois, Texas, Florida – look pretty similar to one another? If so, is the importance of this work diminished? If not, what are the differences and what do they mean? • Is it possible to do a further breakdown of the data by household income categories?

  5. Smaller questions • What exactly do you mean by “control to the NIPA category total”? • Housing and Utilities and Health Care Services are big, important and difficult categories. How do you feel about where you are with these categories? • Financial services and insurance – is there any hope? • How is “free” public education treated?

  6. Suggested changes for next iteration – part 1 • Use examples of large, relatively typical states rather than small, relatively quirky states, even if the differences are not quite as stark • Emphasize how these data will allow an improvement/enhancement of state-level policy analysis, measurement of economic well-being, etc. – how do these data improve upon the data that researchers rely upon for these purposes today?

  7. Suggested changes for next iteration – part 2 • Explain why “consistency with the framework of NIPA” is important • Spend more time talking about the results for the categories of expenditures with the greatest variance across states (health care?) • The section on Cross-sectional Evaluation (essentially a benchmarking of the new estimates against well-known existing state-level data) is heavy going

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