A blog post from BEA Director Vipin Arora
An old boss of mine was fond of a BEA product that many of our users don’t know about—regional price parities (RPPs). He said regional price parities are BEA’s most underappreciated statistic. While I love all our products equally—just like I love all my kids equally—I can’t help but agree that the RPPs are a gem that sometimes gets overlooked. I hope you won’t overlook the new RPP data coming Thursday, Dec. 12.
What makes regional price parities so valuable? They make it simple to compare price levels between different parts of the country. For example, suppose I want to compare buying power in my home state of Illinois with that in Arizona, where I hope to live one day. In 2022, Illinois had an RPP value of 101.3, meaning that prices were 1.3 percent higher in Illinois than the national average. Arizona, meanwhile, had an RPP value of 99.9. With only those two statistics—101.3 and 99.9—I can conclude that average prices in Arizona were about 1.4 percent lower than those in Illinois in 2022. That is the power of RPPs.
It gets even better. The RPP values above are weighted averages of the price levels of goods and services for consumers in one region (either a state or metropolitan area) compared to all other regions in the country. But we also publish separate RPP values for goods and three different categories of services: housing, utilities, and other services. Returning to our example, the overall RPP value for Illinois in 2022 was 101.3, which differed from its more detailed RPP values: 102.8 for goods, 94.1 for housing services, 90.5 for utilities, and 102.9 for other services.
One reason that regional price parities aren’t as well known as some of our other products may be that they haven’t been around that long. The first experimental estimates were published as research in 2005. After making some improvements, we next published prototype estimates in 2008. And after further improvement, the regional price parities became official statistics in 2014 when BEA released estimates for states, metropolitan areas, and the non-metro portion of each state for the years 2008 and onwards. We currently publish regional price parities every year. On Thursday, new RPPs for 2023 will be published and the 2019-2022 RPPs will be updated to reflect the latest source data.
Whether you are considering a job offer in a more expensive city, looking for an affordable place to retire, or are just curious about how price levels compare between different parts of the country, our regional price parities can help. They will allow you to compare buying power across the 50 states and the District of Columbia, or from one metropolitan area to another, in a simple and intuitive way.