Personal consumption expenditure

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Personal consumption expenditure (PCE)

An inflation gauge used by the Federal Reserve Bank to track changes in the prices of goods and services used for personal consumption. The PCE is measured using a chain base index which closely follows the purchasing tendencies of consumers by allowing the goods and services included in the PCE basket to change as consumer preferences change. The Consumer Price Index (CPI), another inflation gauge used by the Federal Reserve, differs from the PCE in that the CPI does not account for changes in consumer preferences because it tracks the change in prices of a fixed basket of goods and services. This is why the Federal Reserve prefers the PCE and not the CPI as the inflation gauge. See: Chain base index, Consumer Price Index

Personal Consumption Expenditures

A measure of inflation in the United States that considers how much people spend on household goods and services, while also weighting for the relative demand for those particular goods and services. In addition to calculating raw changes in prices, PCE measures rises and declines in demand based on those price changes, which, in turn, may enhance or dampen the effects of inflation. The PCE is compiled by the U.S. Department of Commerce and has little effect on the market because its results are usually predictable. It is not as widely used as the Consumer Price Index, which does not consider changes in demand as they occur. See also: PCEPI.
References in periodicals archive ?
Table 2 summarizes the behavior of tax and nontax payments, personal consumption expenditures, and personal saving near the effective dates of the four episodes.
The change in personal consumption expenditures between the two months was merely $1.
The difference between disposable personal income and personal consumption expenditures [TABULAR DATA FOR TABLE 2 OMITTED] (personal saving, net interest payments, and transfers abroad) rose sharply once the tax cut took effect, corresponding to the increase in personal saving.
APC out of personal income did not change because neither personal consumption expenditures nor personal income changed, whereas APC out of disposable personal income decreased because disposable personal income increased when tax payments fell.
Consumers reacted by increasing personal consumption expenditures by $24.
Annual average growth of goods components of personal consumption expenditures, projected 2000-10 (Percent) Personal computers 22.
Low shares, combined with a high level of personal consumption expenditures (which necessitates a high personal income), translate into substantial purchasing power and generate additional market demand and economic activity.
What's Behind the Estates Personal consumption expenditures cover money spent on goods (nondurable and durable) and services.
For example, personal consumption expenditures for food in India, Sri Lanka, and the Sudan exceed 49 percent.
Table 2 Food Expenditures Have Declined Over the Past Two Decades Economy 1970 1980 1989 Percent of personal consumption expenditures spent on food at home United States 14.
The growth of the economy as a whole will result in more money being spent on goods even though they will account for a smaller share of personal consumption expenditures.

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