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Oil boom and housing bust alter US spending trends

Published on NewsOK Modified: August 7, 2014 at 4:50 pm •  Published: August 7, 2014
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WASHINGTON (AP) — North Dakotans, enriched by an oil boom, stepped up their spending at triple the national pace in the three years that followed the Great Recession. 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.

Those and other figures emerged Thursday from a new annual report from the government that for the first time reveals consumer spending on a state-by-state basis from 1997 through 2012. The numbers point to substantial shifts in the economy since the recession ended. The recession, which began in December 2007, officially ended in June 2009.

Spending jumped 28 percent in North Dakota, the largest gain nationwide, from 2009 through 2012. It surged nearly 16 percent in Oklahoma. The next-largest increases were in South Dakota, Texas and West Virginia.

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 it 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 a breakthrough drilling technique, known as 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 a barely visible 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 in Arizona, 6.7 percent. The national average was 11.1 percent.

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