States With the Largest Drop in Services Spending During the Pandemic

Editor's Note: This story originally appeared on Smartest Dollar.

Amid rising inflation, consumers nationwide are now facing increased prices for a wide variety of goods.

The COVID-19 pandemic disrupted global supply chains at the same time that many households had more to spend from government stimulus funds, increased savings, and rising incomes. The economy is now seeing the effects, with significantly higher prices for goods like cars and home appliances due to low supply and heightened demand.

One of the factors contributing to inflation in the price of goods is lower spending on services during the pandemic. Service-based industries like transportation, lodging, restaurants, and entertainment venues have seen weakened demand due to consumer concerns about exposure to the coronavirus that causes COVID-19. Dollars that might have gone toward services have increasingly flowed toward durable goods instead.

For example, many households sought out substitutes when services were restricted, like home exercise equipment for fitness or consumer electronics for entertainment. Others took rising wages and money saved from forgoing trips, performances, and restaurant meals and used it for big-ticket purchases like cars, furniture, and technology.

Data from the U.S. Bureau of Economic Analysis shows how spending between goods and services has differed during the pandemic. Both categories saw sharp declines in spending in the wake of COVID-19 shutdowns in March and April 2020.

But while both categories have since bounced back over time, the growth in spending on durable goods has increased at a much faster rate. Spending on durable goods is now 32.7% higher than it was at the beginning of 2019, while spending on services is up only 7.7% over the same span.

The data used in this analysis is from the Bureau of Economic Analysis. To determine the states with the largest drop in services spending during the pandemic, researchers at Smartest Dollar calculated the percentage change in household consumption expenditures for services from 2019 to 2020. Services spending includes health care services, recreation services, food services, accommodations, financial services, and insurance, among others. Read more about our methodology at the end.

Here are the states with the largest drop in services spending during the pandemic.

15. Georgia

• Percentage change in services spending (2019-2020): -6.8%
• Total change in services spending (2019-2020): -$18,509,200,000
• Percent change in durable goods spending (2019-2020): +9.6%
• Total change in durable goods spending (2019-2020): +$4,396,000,000
• Per capita services spending (2020): $23,701
• Per capita durable goods spending (2020): $4,687

14. Washington

• Percentage change in services spending (2019-2020): -7.1%
• Total change in services spending (2019-2020): -$17,388,600,000
• Percent change in durable goods spending (2019-2020): +8.6%
• Total change in durable goods spending (2019-2020): +$3,358,900,000
• Per capita services spending (2020): $29,678
• Per capita durable goods spending (2020): $5,504

13. Rhode Island

• Percentage change in services spending (2019-2020): -7.5%
• Total change in services spending (2019-2020): -$2,361,000,000
• Percent change in durable goods spending (2019-2020): +4.5%
• Total change in durable goods spending (2019-2020): +$191,200,000
• Per capita services spending (2020): $27,388
• Per capita durable goods spending (2020): $4,240

12. Virginia

• Percentage change in services spending (2019-2020): -7.6%
• Total change in services spending (2019-2020): -$19,051,300,000
• Percent change in durable goods spending (2019-2020): +8.0%
• Total change in durable goods spending (2019-2020): +$3,233,600,000
• Per capita services spending (2020): $26,939
• Per capita durable goods spending (2020): $5,097

11. North Dakota

• Percentage change in services spending (2019-2020): -7.8%
• Total change in services spending (2019-2020): -$1,774,300,000
• Percent change in durable goods spending (2019-2020): +8.9%
• Total change in durable goods spending (2019-2020): +$359,600,000
• Per capita services spending (2020): $27,278
• Per capita durable goods spending (2020): $5,732

10. Pennsylvania

• Percentage change in services spending (2019-2020): -7.8%
• Total change in services spending (2019-2020): -$30,522,900,000
• Percent change in durable goods spending (2019-2020): +4.7%
• Total change in durable goods spending (2019-2020): +$2,830,800,000
• Per capita services spending (2020): $28,142
• Per capita durable goods spending (2020): $4,887

9. Vermont

• Percentage change in services spending (2019-2020): -8.0%
• Total change in services spending (2019-2020): -$1,565,400,000
• Percent change in durable goods spending (2019-2020): +3.0%
• Total change in durable goods spending (2019-2020): +$90,000,000
• Per capita services spending (2020): $28,897
• Per capita durable goods spending (2020): $4,929

8. Minnesota

• Percentage change in services spending (2019-2020): -8.3%
• Total change in services spending (2019-2020): -$14,401,900,000
• Percent change in durable goods spending (2019-2020): +5.4%
• Total change in durable goods spending (2019-2020): +$1,669,100,000
• Per capita services spending (2020): $28,245
• Per capita durable goods spending (2020): $5,772

7. California

• Percentage change in services spending (2019-2020): -8.3%
• Total change in services spending (2019-2020): -$109,783,100,000
• Percent change in durable goods spending (2019-2020): +4.5%
• Total change in durable goods spending (2019-2020): +$8,007,500,000
• Per capita services spending (2020): $30,960
• Per capita durable goods spending (2020): $4,749

6. Maryland

• Percentage change in services spending (2019-2020): -8.4%
• Total change in services spending (2019-2020): -$15,999,900,000
• Percent change in durable goods spending (2019-2020): +3.8%
• Total change in durable goods spending (2019-2020): +$1,041,200,000
• Per capita services spending (2020): $28,721
• Per capita durable goods spending (2020): $4,650

5. Massachusetts

• Percentage change in services spending (2019-2020): -8.6%
• Total change in services spending (2019-2020): -$22,081,300,000
• Percent change in durable goods spending (2019-2020): +2.9%
• Total change in durable goods spending (2019-2020): +$1,022,300,000
• Per capita services spending (2020): $34,024
• Per capita durable goods spending (2020): $5,212

4. Illinois

• Percentage change in services spending (2019-2020): -8.6%
• Total change in services spending (2019-2020): -$32,527,800,000
• Percent change in durable goods spending (2019-2020): +6.7%
• Total change in durable goods spending (2019-2020): +$3,870,300,000
• Per capita services spending (2020): $27,316
• Per capita durable goods spending (2020): $4,927

3. New York

• Percentage change in services spending (2019-2020): -9.3%
• Total change in services spending (2019-2020): -$64,227,600,000
• Percent change in durable goods spending (2019-2020): +1.9%
• Total change in durable goods spending (2019-2020): +$1,561,700,000
• Per capita services spending (2020): $32,338
• Per capita durable goods spending (2020): $4,354

2. Hawaii

• Percentage change in services spending (2019-2020): -9.6%
• Total change in services spending (2019-2020): -$4,294,100,000
• Percent change in durable goods spending (2019-2020): +4.5%
• Total change in durable goods spending (2019-2020): +$238,400,000
• Per capita services spending (2020): $28,612
• Per capita durable goods spending (2020): $3,959

1. Alaska

• Percentage change in services spending (2019-2020): -10.1%
• Total change in services spending (2019-2020): -$2,579,000,000
• Percent change in durable goods spending (2019-2020): +9.1%
• Total change in durable goods spending (2019-2020): +$357,700,000
• Per capita services spending (2020): $31,450
• Per capita durable goods spending (2020): $5,879

Methodology

The data used in this analysis is from the U.S. Bureau of Economic Analysis’s Personal Consumption Expenditures. To determine the states with the largest drop in services spending during the COVID-19 pandemic, researchers calculated the percentage change in household consumption expenditures for services from 2019 to 2020.

In the event of a tie, the state with the greater total decrease in services spending was ranked higher. Durable goods are defined by the BEA as “tangible products that can be stored or inventoried and that have an average life of at least three years.”

Durable goods spending includes things like appliances, home furnishings, outdoor equipment, electronics, sporting goods, and vehicles.

Services are defined as “products that cannot be stored and are consumed at the place and time of their purchase.” Services spending includes health care services, recreation services, food services, accommodations, financial services, and insurance, among others.