Introduction to U.S. Economy: Consumer Spending (CRS Report for Congress)
| Release Date |
Revised Oct. 3, 2024 |
| Report Number |
IF11657 |
| Report Type |
In Focus |
| Authors |
Lida R. Weinstock |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Consumer spending is a key driver of short-run economic
growth in the U.S. economy. This In Focus provides an
overview of consumer spending, summarizes recent trends,
describes its relationship with the business cycle, and
discusses policy that can impact and be affected by
consumer spending.
As defined by the Bureau of Economic Analysis (BEA),
consumer spending, also referred to as personal
consumption expenditures (PCE), is the value of the goods
and services purchased by, or on the behalf of, persons
(households and nonprofit institutions serving households)
living in the United States. PCE comprises roughly twothirds of gross domestic product (GDP) and is therefore
typically a large component of short-run economic growth.
BEA provides PCE data monthly and measures these
expenditures in relation to personal income and prices.
Transactions included in the calculation of PCE consist
largely of the purchases of new goods and services by
households, among others. BEA measures the values of
expenditure transactions, including sales and excise taxes.
Measuring consumption expenditures against income
allows for a comparison of how much consumers spend
versus save. Tracking what people buy and how much they
spend allows BEA to also track fluctuations in price levels,
referred to as inflation in the case of rising prices. One of
the most widely used sources for measuring inflation is
BEA’s PCE Price Index. Real PCE (PCE adjusted for
inflation) is calculated by adjusting PCE by the price index.
