Personal Consumption Expenditures
Personal consumption expenditures (PCE) is a measure of consumer spending on goods and services. It is the largest component of gross domestic product (GDP) and is used to measure the health of the economy. PCE includes spending on durable goods, such as cars and furniture, as well as non-durable goods, such as food and clothing. It also includes services, such as medical care, education, and entertainment. PCE is an important indicator of economic activity and is closely watched by economists and policymakers.
History of Personal Consumption Expenditures
PCE has been used as a measure of economic activity since the early 20th century. The concept was first developed by economist Simon Kuznets in the 1930s. Kuznets argued that consumer spending was the most important factor in determining economic growth. Since then, PCE has become an important tool for measuring economic activity. It is used by governments and central banks to assess the health of the economy and to make policy decisions.
PCE is also used by businesses to assess consumer demand for their products and services. By understanding how much consumers are spending, businesses can better plan their production and marketing strategies. PCE is also used by economists to measure the impact of government policies on the economy.
Table of Comparisons
| Year | PCE ($ trillion) |
|---|---|
| 2020 | 13.2 |
| 2019 | 12.8 |
| 2018 | 12.5 |
| 2017 | 12.2 |
Summary
Personal consumption expenditures (PCE) is an important measure of economic activity. It is the largest component of gross domestic product (GDP) and is used to measure the health of the economy. PCE includes spending on durable goods, such as cars and furniture, as well as non-durable goods, such as food and clothing. It also includes services, such as medical care, education, and entertainment. PCE is closely watched by economists and policymakers, and is used by businesses to assess consumer demand for their products and services.
For more information about PCE, visit the Bureau of Economic Analysis or the Federal Reserve.
See Also
- Gross Domestic Product (GDP)
- Consumer Price Index (CPI)
- Personal Income
- Consumer Spending
- Business Investment
- Government Spending
- Exports
- Imports
- Inflation
- Unemployment
