Personal Consumption Expenditures

New Classification System

Clint McCully, Chief Consumption Branch, NIWD

National Economic Accounts Data Users’ ConferenceApril 13, 2007

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PCE ClassificationBackground

PCE classification system born in 1947 Since 1947 . . .

Large increases in consumer incomes Changes—demographic, technological, cultural, legal, tastes Many new goods and services Increased importance of services, including nonprofit

organizations Marginalization/obsolescence of other goods and services New and expanded sources of funding

PCE classification in 2007 About the same as 1947

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New PCE ClassificationWhat It Is

New structures Type of expenditure (functional) Type of product (by durability)

Functional structure combines structures for individual and nonprofit consumption in the 1993 UN System of National Accounts

Classification of Individual Consumption by Purpose (COICOP)

Classification of Total Outlays of Non-Profit Institutions

Serving Households (NPISH) by Purpose (COPNI) Product structure follows SNA classification of durable

goods, semidurable goods, nondurable goods, and services

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New PCE ClassificationWhat It Accomplishes

Creates a relevant, logical and demand-based structure

Accounts for transactions between households and NPISH

Achieves greater consistency with household surveys

Improves PCE deflation by precisely matching categories with associated price indexes

Facilitates comparisons with other countries

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New PCE Classification Incorporation

2002 I/O benchmark estimates Functional classification Released in 2007

Benchmark estimates in 2008 Time series back to 1929

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PCE Functional Classification: New and current

CURRENT

1. Food and tobacco2. Clothing, accessories, and

jewelry3. Personal care4. Housing5. Household operation6. Medical care7. Personal business8. Transportation

9. Recreation10. Education and research11. Religious and welfare

activities

12. Foreign travel by U.S. residents

NEW Household Consumption Expenditures

1. Food and non-alcoholic beverages2. Alcoholic beverages and tobacco3. Clothing and footwear4. Housing, water, electricity, gas and other

fuels5. Furnishings, household equipment and

routine household maintenance6. Health7. Transportation8. Communication9. Recreation and culture10.Education11. Restaurants and accommodation

services12. Insurance and other financial

services 13. Miscellaneous goods and services 14. Net foreign travel and remittances

Final Consumption Expenditures of Nonprofit Institutions Serving Households (NPISH)

1997

5547.45440.4 421.5 115.4 263.8 999.1

268.1

932.8 634.4 121.6 521.9 98.3 340.6

427.6326.0-21.1107.3

5547.4

850.0337.4

82.9842.6616.2

1002.8412.9685.2

474.5129.7134.2

-21.1

No change in total

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PCE Functional Classification: New and current

CURRENT

1. Food and tobacco2. Clothing, accessories, and

jewelry3. Personal care4. Housing5. Household operation6. Medical care7. Personal business8. Transportation

9. Recreation10. Education and research11. Religious and welfare

activities

12. Foreign travel by U.S. residents

NEW Household Consumption Expenditures

1. Food and non-alcoholic beverages2. Alcoholic beverages and tobacco3. Clothing and footwear4. Housing, water, electricity, gas and other

fuels5. Furnishings, household equipment and

routine household maintenance6. Health7. Transportation8. Communication9. Recreation and culture10.Education11. Restaurants and accommodation

services12. Insurance and other financial

services 13. Miscellaneous goods and services 14. Net foreign travel and remittances

Final Consumption Expenditures of Nonprofit Institutions Serving Households (NPISH)

1997

5547.45440.4 421.5 115.4 263.8 999.1

268.1

932.8 634.4 121.6 521.9 98.3 340.6

427.6326.0-21.1107.3

5547.4

850.0337.4

82.9842.6616.2

1002.8412.9685.2

474.5129.7134.2

-21.1

New categories

Disappearing Categories

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PCE Functional Classification: New and current

CURRENT

1. Food and tobacco2. Clothing, accessories,

and jewelry3. Personal care4. Housing5. Household operation6. Medical care7. Personal business8. Transportation9. Recreation10. Education and research11. Religious and welfare

activities12. Foreign travel by U.S.

residents

NEW Household Consumption

Expenditures1. Food and non-alcoholic beverages2. Alcoholic beverages and tobacco3. Clothing and footwear4. Housing, water, electricity, gas and other

fuels5. Furnishings, household equipment and

routine household maintenance6. Health7. Transportation8. Communication9. Recreation and culture10.Education and research11. Restaurants and accommodation

services12. Insurance and other financial

services 13. Miscellaneous goods and services 14. Net foreign travel and remittances

Final Consumption Expenditures of Nonprofit Institutions Serving Households (NPISH)

421.5

115.4

18.2 Pet

food 294.9

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PCE Functional Classification: New and current

CURRENT

1. Food and tobacco2. Clothing, accessories,

and jewelry3. Personal care4. Housing5. Household operation6. Medical care7. Personal business8. Transportation9. Recreation10. Education and research11. Religious and welfare

activities12. Foreign travel by U.S.

residents

NEW Household Consumption

Expenditures1. Food and non-alcoholic beverages2. Alcoholic beverages and tobacco3. Clothing and footwear4. Housing, water, electricity, gas and other

fuels5. Furnishings, household equipment and

routine household maintenance6. Health7. Transport8. Communication9. Recreation and culture10.Education and research11. Restaurants and accommodation

services12. Insurance and other financial

services 13. Miscellaneous goods and services 14. Net foreign travel and remittances

Final Consumption Expenditures of Nonprofit Institutions Serving Households (NPISH)

103.6 Telephone

188.7

268.1

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PCE Product Classification NEW Structure CURRENT Structure

Durable Goods

Motor vehicles

Furnishings & durable household equipment Recreational equipment & vehicles Other durable goods

Nondurable Goods

Semidurable goods

Clothing and footwear

Recreational and reading items

Household itemsMotor vehicle parts & accessoriesPersonal items

Other nondurable goodsPurchased food, beverages and tobaccoGasoline and other energy goodsOther nondurable goods, n.e.c.

Durable Goods

Motor vehicle and partsFurniture and household equipmentOther

Nondurable GoodsFoodClothing and shoes

Gasoline, fuel oil & other energy goodsOther

557.6254.0130.8

99.773.2

1465.0473.8

249.3

114.4

58.3

39.1

12.8991.2537.0

147.7306.6

692.7305.1256.2

131.4

1619.0796.2

258.1

147.7

416.9

1997

To semidurables

Purchased meals to services

New categories

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PCE Product Classification (cont.)

NEW Structure CURRENT Structure

Services

Housing Household operation services Transportation services Medical care services Recreation services Other services

Services Household consumption expenditures

Housing and utilitiesHealth careTransportation servicesRecreational and cultural activitiesRestaurants and accommodation servicesInsurance and other financial servicesOther services

Final consumption expenditures of nonprofit institutions serving households

3524.8

3417.6

975.9803.8

206.9213.9340.6

427.6

448.9107.2

1997

3235.8

842.6337.0

245.7873.0215.1722.4

New categories

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PCE Product Classification

NEW Structure CURRENT Structure

Durable Goods

Motor vehiclesRecreational equipment & vehicles……..

Nondurable GoodsSemidurable goodsMotor vehicle parts & accessories……..Other nondurable goods……..

Services

…….

Durable GoodsMotor vehicle and partsFurniture and household equipmentOthers

Nondurable GoodsFoodClothing and shoesGasoline, fuel oil & other energy goodsOthers

ServicesHousingHousehold operation servicesTransportation servicesMedical care servicesRecreation servicesOther services

254.0

9.2

41.9

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PCE Product Classification

NEW Structure CURRENT Structure

Durable Goods……..

Nondurable GoodsSemidurable goodsOther nondurable goodsFood and non-alcoholic beveragesAlcoholic beverages & tobacco……..Nondurable recreational items, n.e.c.……..

Services……..Restaurants & accommodation…….

Durable GoodsMotor vehicle and partsFurniture and household equipmentOthers

Nondurable GoodsFood Clothing and shoesGasoline, fuel oil & other energy goodsOthers

ServicesHousingHousehold operation servicesTransportation servicesMedical care servicesRecreation servicesOther services