Personal Consumption Expenditures (PCE)
What it is:
Personal Consumption Expenditures (PCE), or the U.S. Bureau of Economic Analysis (BEA) that synthesizes a host of data, chief among them the U.S. Producer and Consumer Price indices., is a statistic compiled and released quarterly by the
How it works (Example):
The index", however, excludes the more volatile components of food and energy.measures the price fluctuations and related consumer behavior for all domestic consumption of durable and non-durable goods and services targeted toward individuals and households. The PCE "core
Personal consumption is divided into two key categories: goods and services. The category of "goods" is further broken down into "durable" goods, which are big-ticket items (refrigerators, television sets, cars, mobile phones, etc.) that will last more than three years, and "non-durable" goods that are more transitory (e.g., cosmetics, fuel, clothing, etc.).
Why it Matters:
PCE not only measures underlying inflationary pressures, it also reflects whether the consumer is doing his or her part to propel economic growth.