BLS WORKING PAPERS 

U.S. Department of Labor 

U.S. Bureau of Labor Statistics 

Office of Prices and Living Conditions 

Understanding the Relationship: CE Survey and PCE 

William Passero, U.S. Bureau of Labor Statistics 

Thesia I. Garner, U.S. Bureau of Labor Statistics

Clinton McCully, Bureau of Economic Analysis

Passero, William, Thesia I. Garner, and Clinton McCully. “Understanding the Relationship: CE 

Survey and PCE,” Chapter 6 in Improving Measurement of Consumer Expenditures (eds. 

Christopher Carroll, Thomas Crossley, and John Sabelhaus), University of Chicago Press, 

National Bureau of Economic Research in NBER Book Series Studies in Income and Wealth, 

May 2015, pp. 181 – 203. 

https://www.nber.org/books-and-chapters/improving-measurement-consumerexpenditures/understanding-relationship-ce-survey-and-pce

Working Paper 462 

March 2013 

Published May 2015 

All views expressed in this paper are those of the authors and do not necessarily reflect the views 

or policies of the U.S. Bureau of Labor Statistics.
This PDF is a selection from a published volume from the National 

Bureau of Economic Research

Volume Title: Improving the Measurement of Consumer Expenditures

Volume Author/Editor: Christopher D. Carroll, Thomas F. Crossley, and 

John Sabelhaus, editors

Series: Studies in Income and Wealth, volume 74

Volume Publisher: University of Chicago Press

Volume ISBN: 0-226-12665-X, 978-0-226-12665-4

Volume URL: http://www.nber.org/books/carr11-1

Conference Date: December 2-3, 2011

Publication Date: May 2015

Chapter Title: Understanding the Relationship: CE Survey and PCE

Chapter Author(s): William Passero, Thesia I. Garner, Clinton McCully

Chapter URL: http://www.nber.org/chapters/c12659

Chapter pages in book: (p. 181 – 203)
181

6.1 Introduction

The Consumer Expenditure Survey (CE) data from the Bureau of Labor 

Statistics (BLS) and the personal consumption expenditures (PCE) data 

from the Bureau of Economic Analysis (BEA) are two sources of expenditures that focus on households in the United States.1

 Both are used to assess 

the economic well- being of households in the United States. Comparisons 

of data from these two sources have been conducted for many years, both 

within the BEA and BLS and by outside researchers, with resulting studies 

showing varying degrees of disparities in expenditures from the two sources. 

William Passero is supervisory economist at the Bureau of Labor Statistics, US Department 

of Labor in the Division of Consumer Expenditure Surveys. Thesia I. Garner is senior research 

economist in the Division of Price and Index Number Research at the Bureau of Labor Statistics, US Department of Labor. Clinton McCully is the former chief of the Research Group 

in the National Income and Wealth Division, Bureau of Economic Analysis, US Department 

of Commerce.

A presentation based on this chapter was given at the conference on Improving the Measurement of Consumer Expenditures. That conference was sponsored by the Conference on 

Research in Income and Wealth and the National Bureau of Economic Research, with support from the Centre for Microdata Methods and Practice, December 2–3, 2011, Grand Hyatt 

Washington, 1000 H Street, NW, Washington, DC. We thank Brent Moulton, John Greenlees, 

and others attending the CRIW- NBER conference on Improving Measurement of Consumer 

Expenditures for helpful comments and discussion, and John Sabelhaus for extensive comments 

and suggestions after the conference. All views expressed in this manuscript are those of the 

authors and do not necessarily reflect the policies of the Bureau of Economic Analysis, the 

Bureau of Labor Statistics, or the views of other staff members. The authors take full responsibility for any errors. For acknowledgments, sources of research support, and disclosure of 

the authors’ material financial relationships, if any, please see http://www.nber.org/chapters/

c12659.ack.

1. For a definition of consumer unit, and the Consumer Expenditure Surveys, see the Bureau 

of Labor Statistics website at http://stats.bls.gov/cex/faq.htm#q3.

6

Understanding the Relationship

CE Survey and PCE

William Passero, Thesia I. Garner, and Clinton McCully

Understanding the Relationship: CE Survey and PCE
182 William Passero, Thesia I. Garner, and Clinton McCully

Recent studies within the BEA and BLS include those by Garner, McClelland, 

and Passero (2009); Garner et al. (2006); and McCully (2011). For earlier 

BLS studies of CE- to- PCE comparisons, see BLS (2008). One of the earliest 

comparisons by outside researchers was conducted by Houthakker and Taylor 

(1970). In this work, the authors compared 1960–1961 CE data with PCE

aggregate expenditures. Later and more recent related studies, in which CE 

and PCE are compared, include those by Attanasio, Battistin, and Leicester 

(2006); Bee, Meyer, and Sullivan (2012); Meyer and Sullivan (2010, 2011); and 

Slesnick (1992, 1998, 2000). Maki and Garner (2010) conducted a study of 

CE expenditures relative to PCE; their results suggest that much of the difference in the two is due to measurement error. Barrett, Levell, and Milligan 

(chapter 9, this volume) also considered a measurement issue in their study 

of the relationship between declining CE participation rates and declines in 

CE- to- PCE ratios over time; they compared the US results to those from 

other countries.2 The CE and PCE have also been compared to assess economic growth and other economic trends. For example, Attanasio and Weber 

(1995) used the data to address the question of whether consumption growth 

is consistent. Parker and Preston (2005) have studied precautionary savings 

and consumption. Bosworth, Burtless, and Sabelhaus (1991) have studied the 

decline in savings, and Fernandez- Villaverde and Krueger (2007) have considered consumption over the life cycle. See Meyer and Sullivan (2009, 2011) for 

a study of consumption and poverty. Blair (chapter 2, this volume) examined 

differences in the Consumer Price Index (CPI) expenditure weights based on 

the CE and the PCE (also see McCully, Moore, and Stewart 2007).

When ratios of CE to PCE aggregate expenditures diverge, many express 

concern about the quality of the CE data, since the assumption is that both 

the CE and PCE are designed to measure the same phenomenon, household 

spending. However, household spending differs for the two. The CE is designed 

to collect expenditures made by households for goods and services. The PCE 

is designed to reflect spending by households and by nonprofits on behalf 

of households. As noted by various researchers (e.g., McCully 2011; Garner, McClelland, and Passero 2009; Bee, Meyer, and Sullivan 2012; Slesnick 

1998), some differences in estimates of CE and PCE are expected because 

of differences in coverage and definition. However, even after accounting for 

these differences, CE and PCE aggregate expenditures still diverge because of 

measurement differences. In the first part of this chapter, we try to account 

for these differences using published CE and PCE data, referring to functional categories of goods and services (e.g., clothing, housing). In the second 

part, our focus is on building a data concordance at a finer level of detail to 

develop a series of the most comparable categories of expenditures for the 

2. Battistin and Padula (2008) examined the role of measurement errors in distributions of 

expenditures from the Tucker, Biemer, and Meekins (2005) examined levels of underreporting 

of expenditures using latent class analysis.
Understanding the Relationship: CE Survey and PCE 183

CE and PCE by type of product (i.e., durable, nondurable, service). For the 

concordance, much attention is given to making adjustments in expenditures 

so that they are as comparable as possible; this means that the definition of 

certain categories of expenditures differ from the published estimates (for 

example, the use of rental equivalence in the concordance versus the use of 

spending in publication estimates). This concordance is the product of joint 

work conducted over the past several years by BEA and BLS researchers. 

Earlier comparisons within the BEA and BLS were based on independently 

developed CE- to- PCE concordances. The joint concordance was developed 

using the classification system introduced by the BEA in July 2009, with the 

goal that the concordance would be acceptable to the BEA and BLS for data 

comparisons. Results presented at the Conference on Research in Income and 

Wealth (CRIW) in December 2011 revealed that this jointly created concordance results in CE- to- PCE ratios that are very similar to those produced by 

the BLS in the past (Passero et al. 2011).

Research that uses the joint concordance to build PCE- adjusted CPI, presented in Blair (chapter 2, this volume), uses a set of alternately weighted 

indexes created using PCE expenditure weights and CPI methodology. The 

CE- to- PCE concordance from this paper is used in Blair’s work to map PCE 

items to CPI entry- level items so that the CPI can be adjusted according to 

PCE rather than CE expenditure levels. Conceptual differences, noted in the 

concordance, are used in the Blair chapter to create two PCE- weighted CPIs: 

one that is adjusted to match CE and CPI item definitions and one to match 

PCE item definitions.

The purpose of this chapter is to present similarities and differences 

between the CE and PCE and to present results in two ways: first, by making adjustments in published CE and PCE estimates in terms of coverage, 

definition, and measurement, and second, by redefining expenditure categories and restricting the expenditures to those deemed most comparable. 

Two questions are addressed: (1) How well does the CE and PCE match up 

overall and across categories? and (2) How has this relationship changed 

over time? The CE and PCE data from 1992 to 2010 are analyzed.

Aggregate expenditures, adjusted for differences in coverage, definition, 

and measurement are presented in table 6.1 for CE and PCE. Without accounting for these differences, published CE total expenditures as a percentage of 

PCE decreased from 71 percent in 1992 to 57 percent of PCE in 2010. After 

these adjustments, the aggregate published CE value of comparable items 

decreased from 75 percent of PCE comparables in 1992 to 62 percent in 2010. 

Aggregate expenditures and ratios of CE to PCE are produced for durables, 

nondurables, and services in tables 6.2A, 6.2B, and 6.2C. The CE aggregates in these tables have been adjusted to reduce, at a more detailed level, 

differences in expenditures with respect to the PCE. Through this exercise, 

CE aggregate expenditures have been made more comparable to PCE expenditures; CE expenditures are 84 percent of PCE aggregates for 1992 but fall 
Table 6.1 Reconciliation of published Consumer Expenditures (CE) and personal consumption expenditures (PCE) (values in billions of dollars)

1992 2010 

Change 

1992 to 

2010

Percent 

change 

1992 to 

2010

Shares of increase

CE- PCE 

disparity

Measurement 

differences

Personal consumption expenditures 4,236.9 10,245.5 6,008.6 141.8 —— ——

Less: Final consumption expenditures of nonprofit institutions 92.3 280.2 187.9 203.4 5.1 ——

Equals: Household consumption expenditures 4,144.5 9,965.3 5,820.8 140.4 —— ——

Less: Coverage adjustments 28.6 67.2 38.6 135.2 0.6 ——

Less: Definitional differences (net) 414.1 1,663.4 1,249.3 301.7 43.3 ——

PCE not comparable to CE 1,265.3 3,518.5 2,253.2 178.1 53.1 ——

Expenditures financed by government and employers 535.0 1,630.2 1095.2 204.7 29.7 ——

Government social benefits 275.7 1,022.7 747.0 270.9 24.5 ——

Health 260.4 949.9 689.5 264.8 22.3 ——

Other 15.3 72.8 57.5 376.0 2.2 ——

Employer- paid health insurance & workers’ compensation 259.3 607.5 348.2 134.3 5.1 ——

Imputed rental value of owner- occupied housing 468.2 1,215.1 746.8 159.5 15.2 ——

Financial services and insurance 212.1 560.5 348.4 164.3 7.4 ——

Financial services 174.7 511.0 336.3 192.5 8.6 ——

Insurance 37.4 49.5 12.1 32.4 (1.2) ——

Net purchases of used motor vehicles 49.4 112.4 63.1 127.7 0.8 ——

Food produced & consumed on farms 0.6 0.3 (0.3) (43.5) (0.0) ——

Less: CE not comparable to PCE 851.2 1,855.1 1,003.9 117.9 9.8 ——

Expenses of owner- occupied housing 349.3 773.2 423.9 121.4 4.6 ——

Used motor vehicles 80.0 134.9 55.0 68.7 (1.1) ——

Finance charges 31.0 35.5 4.6 14.8 (1.3) ——

State and local registration and license 8.3 13.5 5.2 62.0 (0.1) ——

Cash contributions incl. alimony/child support 95.8 197.8 101.9 106.4 0.5 ——

Life insurance/annuity premiums 35.3 38.5 3.2 9.1 (1.5) ——

Contributions to pensions and Social Security 239.7 612.1 372.3 155.3 7.3 ——

Medicare premiums 11.8 49.7 37.9 322.0 1.4 ——
Equals: CE expenditures exclusive of measurement differences 3,701.9 8,234.8 4,532.9 122.4 —— ——

Less: Measurement differences 716.7 2,408.4 1,691.7 236.0 51.1 ——

Equals: CE total expenditures 2,985.2 5,826.3 2,841.2 95.2 —— ——

CE total expenditures percent of PCE 70.5 56.9 (13.6) (19.3) —— ——

PCE less CE total expenditures 1,251.7 4,419.2 3,167.5 253.0 —— ——

Measurement differences as percent of total differences 57.3 54.5 (2.8) (4.8) —— ——

PCE less CE comparables 716.7 2,408.4 1,691.7 236.0 —— ——

PCE comparable 2,850.7 6,379.6 3,528.9 123.8 —— ——

CE comparable 2,134.0 3,971.2 1,837.2 86.1 —— ——

CE percent of PCE comparables 74.9 62.2 (12.6) (16.8) —— ——

PCE- CE differences by functional category

Food and beverages purchased for off- premises consumption 123.2 298.9 175.7 142.7 —— 10.4

Clothing, footwear, and related services 73.0 172.1 99.1 135.7 —— 5.9

Housing, utilities, and fuels 1.2 44.1 42.9 3,439.1 —— 2.5Furnishings, household equipment, and routine household maintenance 49.8 175.5 125.6 252.2 —— 7.4

Health (including insurance) 81.1 251.4 170.3 210.0 —— 10.1

Transportation (including insurance) 44.3 226.5 182.2 411.7 —— 10.8

Communications 10.8 49.1 38.3 354.7 —— 2.3

Recreation 140.0 514.5 374.5 267.5 —— 22.1

Education 37.0 77.2 40.3 109.0 —— 2.4

Food services and accommodations 56.4 212.6 156.2 277.0 —— 9.2

Other goods & services 88.2 336.8 248.6 281.7 —— 18.6
Table 6.2A Summary comparison of aggregate Consumer Expenditures (CE) and personal consumption expenditures (PCE), based on 2002 benchmark 

and restricted to the most comparable categories on the basis of concepts involved and comprehensiveness, 1992 and 2010 (in millions of dollars)

1992 2010

PCE category PCE CE

CE- to- PCE 

ratio PCE CE

CE- to- PCE 

ratio

Total durables, nondurables, and services

Total 4,144,548 2,880,449 0.695 9,965,306 5,740,672 0.576Comparable items 2,702,984 2,273,606 0.841 6,173,121 4,594,311 0.744Ratio of comparable items to total 0.652 0.789 0.619 0.800

Comparable items (adjusted for population) 2,630,940 2,273,606 0.864 6,066,251 4,594,311 0.757

Durable goods

Total durable goods 508,082 393,010 0.774 1,085,484 594,752 0.548Comparable durable goods 434,090 357,161 0.823 862,279 536,968 0.623Ratio of comparable durables to total durables 0.854 0.909 0.794 0.903

Motor vehicles and parts 204,798 203,566 0.994 340,124 306,545 0.901

Furniture and furnishings 69,274 58,009 0.837 140,960 75,230 0.534

Household appliances 24,287 15,735 0.648 40,536 32,137 0.793

Glassware, tableware, and household utensils 20,050 10,082 0.503 41,545 14,765 0.355

Outdoor equipment and supplies 1,684 413 0.245 4,788 448 0.094Televisions 10,797 6,433 0.596 37,407 14,379 0.384

Audio equipment 9,847 6,271 0.637 19,019 4,989 0.262

Photographic equipment 2,383 1,379 0.579 2,844 3,072 1.080

Personal computers and peripheral equipment 9,112 7,346 0.806 47,355 24,689 0.521

Sporting equipment, supplies, guns, and ammunition 21,743 10,925 0.502 53,258 14,739 0.277

Bicycles and accessories 2,484 1,592 0.641 4,257 1,868 0.439

Pleasure boats 3,790 6,124 1.616 9,779 8,672 0.887

Other recreational vehicles 6,454 6,018 0.932 9,580 3,755 0.392

Recreational books 11,507 6,051 0.526 30,412 7,118 0.234

Musical instruments 2,186 1,862 0.852 4,939 1,848 0.374

Jewelry and watches 31,645 13,120 0.415 61,485 18,102 0.294

Telephone and facsimile equipment 2,049 2,235 1.091 13,991 4,612 0.330
Table 6.2B Summary comparison of aggregate Consumer Expenditures (CE) and personal consumption expenditures (PCE), based on 2002 benchmark 

and restricted to the most comparable categories on the basis of concepts involved and comprehensiveness, 1992 and 2010 (in millions of dollars)

1992 2010

PCE category PCE CE

CE- to- PCE 

ratio PCE CE

CE- to- PCE 

ratio

Total durables, nondurables, and services

Total 4,144,548 2,880,449 0.695 9,965,306 5,740,672 0.576Comparable items 2,702,984 2,273,606 0.841 6,173,121 4,594,311 0.744Ratio of comparable items to total 0.652 0.789 0.619 0.800Comparable items (adjusted for population) 2,630,940 2,273,606 0.864 6,066,251 4,594,311 0.757

Nondurable goods

Total nondurable goods 1,055,187 745,779 0.707 2,301,517 1,432,306 0.622Comparable nondurable goods 983,314 690,254 0.702 2,154,925 1,349,644 0.626Ratio of comparable nondurables to total nondurables 0.932 0.926 0.936 0.942

Food purchased for off- premises consumption 305,188 241,497 0.791 580,641 381,772 0.658

Nonalcoholic beverages purchased for off- premises consumption 49,408 29,498 0.597 78,741 50,312 0.639Alcoholic beverages purchased for off- premises consumption 49,294 16,511 0.335 106,649 27,473 0.258

Women’s and girls’ clothing 103,175 68,056 0.660 161,192 80,116 0.497Men’s and boys’ clothing 63,009 45,018 0.714 95,480 46,175 0.484

Clothing materials 3,643 1,084 0.298 4,203 1,227 0.292

Shoes and other footwear 32,903 23,124 0.703 59,334 36,679 0.618

Gasoline and other energy goods 125,007 107,384 0.859 354,117 275,726 0.779Pharmaceutical products 68,196 53,350 0.782 326,869 267,019 0.817Pets and related products 14,756 10,572 0.716 50,068 39,653 0.792

Film and photographic supplies 3,641 2,006 0.551 2,238 213 0.095

Household cleaning products 20,689 12,861 0.622 41,287 20,676 0.501

Household paper products 16,191 9,933 0.613 40,325 20,331 0.504

Household linens 16,110 7,252 0.450 24,288 9,860 0.406

Sewing items 767 638 0.832 1,213 1,154 0.951

Personal care products 41,370 23,190 0.561 95,239 40,928 0.430

Tobacco 48,008 27,497 0.573 94,357 43,846 0.465

Newspapers and periodicals 21,959 10,783 0.491 38,684 6,484 0.168
Table 6.2C Summary comparison of aggregate Consumer Expenditures (CE) and personal consumption expenditures (PCE), based on 2002 benchmark 

and restricted to the most comparable categories on the basis of concepts involved and comprehensiveness, 1992 and 2010 (in millions of dollars)

1992 2010

PCE category PCE CE

CE- to- PCE 

ratio PCE CE

CE- to- PCE 

ratio

Total durables, nondurables, and services

Total 4,144,548 2,880,449 0.695 9,965,306 5,740,672 0.576Comparable items 2,702,984 2,273,606 0.841 6,173,121 4,594,311 0.744Ratio of comparable items to total 0.652 0.789 0.619 0.800

Comparable items (adjusted for population) 2,630,940 2,273,606 0.864 6,066,251 4,594,311 0.757

Services—household consumption expenditures

Total services 2,581,279 1,741,660 0.675 6,578,305 3,713,614 0.565Comparable services 1,285,580 1,226,191 0.954 3,155,917 2,707,699 0.858Ratio of comparable services to total services 0.498 0.704 0.480 0.729

Rent and utilities 300,537 300,378 0.999 668,759 625,584 0.935Imputed rental of owner- occupied nonfarm housing 462,819 555,877 1.201 1,203,353 1,320,466 1.097Other motor vehicle services 19,410 18,305 0.943 58,612 35,910 0.613Audio- video, photographic, and information processing 

equipment services

42,597 28,425 0.667 102,654 83,783 0.816

Gambling 28,080 5,135 0.183 99,578 9,517 0.096Veterinary and other services for pets 5,839 5,584 0.956 25,669 18,431 0.718Purchased meals and beverages 247,054 174,692 0.707 533,078 322,435 0.605Food supplied to civilians 6,573 2,609 0.397 12,501 3,325 0.266Communication 79,093 68,262 0.863 223,385 184,529 0.826Accounting and other business services 7,722 8,957 1.160 27,745 19,068 0.687Funeral and burial services 10,969 6,711 0.612 18,731 7,451 0.398Personal care services 35,661 25,273 0.709 95,870 35,037 0.365Repair and hire of footwear 638 344 0.539 457 187 0.409Child care 12,013 8,320 0.693 30,309 9,629 0.318

Household maintenance 26,575 17,319 0.652 55,216 32,347 0.586
Understanding the Relationship: CE Survey and PCE 189

to 74 percent by 2010. The second analysis reveals that nondurable categories are most alike for the CE and PCE with about 93 percent of total 

nondurable expenditures identified as comparable within the CE and within 

the PCE. Regarding trends over time and focusing on comparable goods 

and services only, CE- to- PCE ratios have steadily decreased. The greatest 

decline in CE- to- PCE ratios is for durables, with a decrease of 24 percentage 

points. Ratios for comparable services dropped the least, with a decrease of 

10 percentage points.

The next section of the chapter focuses on coverage, definitional, and 

measurement differences. This is followed by information regarding the 

motivation for the development of the more detailed concordance, and 

then further results from the joint concordance. These results are presented in terms of CE- to- PCE ratios and trends in CE and PCE expenditures over time. This is followed by a summary and discussion of future 

directions.

6.2 Coverage, Definitional, and Measurement Differences

Coverage, definitional, and measurement differences account for the overall differences in the BEA- produced reconciliation of published CE and 

PCE estimates presented in table 6.1. The CE total expenditures have been 

consistently lower than PCE, the differences are large, and relative differences have increased substantially over time. Without accounting for these 

differences, CE total expenditures as a percentage of PCE decreased from 

70 percent in 1992 to 58 percent of PCE in 2010. According to results that 

underlie table 6.1, measurement differences have accounted for more than 

half of the CE- PCE differences throughout the 1992 to 2010 period, with 

their share ranging from 53 to 60 percent. The contributions of measurement differences and of coverage and definitional differences to the widening 

of the CE- PCE gap from 1992 to 2010 have been about equal.

6.2.1 Coverage 

The share of CE- PCE differences accounted for by coverage differences 

decreased from 10 percent in 1992 to 8 percent in 2010. The primary source 

of coverage differences is the inclusion in PCE of the final consumption 

expenditures of nonprofit institutions serving households (NPISHs), measured as their gross expenses less sales to households and other sectors. The 

NPISHs have remained in the range of 2 to 3 percent of PCE throughout the 

1992–2010 period.3

 The PCE less NPISH final consumption expenditures 

equals household consumption expenditures (HCE). The NPISH sales to 

households, such as sales of education services, are included in the appropriate household consumption expenditures (HCE) categories. The remaining 

coverage differences have been less than 1 percent of PCE, and are accounted 

3. This could also be treated as a definitional difference.
190 William Passero, Thesia I. Garner, and Clinton McCully

for by the net effect of differences in population coverage. The CE survey 

collects data from consumer units representing the civilian noninstitutional 

population residing in the United States. This includes those in noninstitutional group quarters, such as housing facilities for students and workers. 

Included in PCE but not in CE are expenditures of the institutionalized 

population, domestic military personnel living on post, federal military and 

civilian personnel stationed abroad regardless of the length of their assignments, and US citizens who are employees of US businesses working abroad 

for less than one year and whose usual residence is in the United States. 

Excluded from PCE but included in the CE are expenditures of students, 

temporary workers, and foreign nationals residing in the United States who 

are employees of international organizations and other countries. The PCE 

also includes expenditures by those who died during the year and could not 

be included in the CE, which asks households for their expenditures in the 

previous three months or week. The less than 1 percent coverage differences 

do not include the health care provided to the institutionalized and decedent populations through the Medicare and Medicaid programs. Including 

these expenditures would increase the population coverage differences to 

about 3 percent of PCE. Instead, all Medicare and Medicaid expenditures 

are treated here as definitional differences, part of third- party payments on 

behalf of individuals in PCE that are not part of CE.

6.2.2 Definitions 

Definitional differences are accounted for by the net effect of PCE categories 

not comparable to CE and CE categories not comparable to PCE. The value of 

noncomparable PCE categories is significantly larger than for noncomparable 

CE categories, and relative differences between them have increased significantly over time. In 1992, noncomparable PCE was 50 percent larger than 

noncomparable CE, and by 2010 was 90 percent larger, at $3,518.5 billion. 

The share of noncomparable PCE categories increased from 30 percent to 34 

percent of PCE over the 1992 to 2010 period, while noncomparable CE expenditures increased from 29 percent to 32 percent of the CE total over the period.

Exclusive of NPISHs, PCE measures out- of- pocket purchases of goods 

and services by households, purchases of goods and services made on behalf 

of households, and imputed purchases by households for some expenditure 

categories. The CE measures out- of- pocket expenditures by consumer units, 

including purchases of goods and services, interest payments, contributions 

to Social Security and pension plans, and cash contributions and other transfers to charitable organizations and other households.4

 Expenditures in PCE 

4. Consumer units as defined in the CE are not identical to households, in that a household 

can have more than one consumer unit if groups or individuals living in the household are 

financially independent. The use of consumer units results in differences in average expenditures 

compared to the use of households, but in comparisons of aggregate expenditures, the use of 

consumer units versus households does not have any substantive effect.
Understanding the Relationship: CE Survey and PCE 191

that have no CE counterpart primarily consist of third- party expenditures 

by government and employers, imputed expenditures for owner- occupied 

rent,5 and financial services and insurance including both direct and imputed 

expenditures. Together, these expenditures account for more than 95 percent of noncomparable PCE. Other noncomparable expenditures in the CE 

include used motor vehicles and the value net of expenses of food produced 

and consumed on farms.

Purchases of goods and services on behalf of households in PCE consist of purchases by government and employers. Expenditures by government primarily consist of payments for health care under the Medicare and 

Medicaid programs, but also include other health care expenditures and 

payments for education and energy assistance. These expenditures have 

increased very rapidly over time, and in 2010 were $1,022.7 billion, 271 percent greater than in 1992, and accounted for about one- fourth of the widening of the CE- PCE gap over that time. Purchases by employers consist of 

employer contributions for health insurance and workers’ compensation.6

While these are accounted for as part of personal income in the National 

Income and Product Accounts (NIPA) personal income and outlay account, 

these contributions are accounted for in PCE as well. Insurance payments 

for health care are included in the PCE health care categories, and premiums 

net of health care payments are accounted for in PCE for health insurance.7

These accounted for about $600 billion in expenditures in 2010, but because 

they have not grown nearly as rapidly as have government third- party expenditures, they accounted for only about 5 percent of the widening of the 

CE- PCE gap.

Financial services in PCE have no CE counterpart, while insurance is 

considered noncomparable because of significant differences in treatment 

compared to the CE.8 These services were valued at $560 billion in 2010, 

164 percent more than in 1992, and accounted for 7 percent of the widening 

of the CE- PCE gap. Over the 1992–2010 period, PCE for financial services 

increased much more rapidly than insurance and more than accounted for 

the widening of the CE- PCE gap.

The PCE for financial services includes both imputed services and financial service charges, fees, and commissions. Imputed financial services are 

services furnished without payment by banks, other depository institutions, 

and regulated investment companies. For banks and other depository insti5. Although the CE program does not employ the rental equivalence concept, the BLS does 

use CE data to construct weights for owners’ equivalent rent in the CPI.

6. Employers also make contributions for life insurance, but because life insurer expenses 

rather than life insurance premiums are measured in PCE, these are not included.

7. Cash benefits netted from workers’ compensation premiums are not captured elsewhere 

in PCE, and these are accounted for as noncomparable insurance. 

8. Noncomparable PCE for financial services removes bank service charges, safe deposit box 

rental, and credit card membership fees measured in both PCE and the CE. The value of these 

expenditures is 1 to 2 percent of total PCE for financial services. 
192 William Passero, Thesia I. Garner, and Clinton McCully

tutions, these are services to depositors, and for commercial banks they 

include borrower services as well. For banks, the imputed charges to depositors are measured using the difference between interest paid on deposit 

accounts and interest that would have been paid if those assets were invested 

in riskless government securities. The difference accounts for the value of 

bank services that are not directly charged to depositors, such as bookkeeping and check- clearing services. The value of these services is allocated 

to households in proportion to their share of deposits. The estimation of 

borrower services is done in a similar fashion, using the differences between 

interest earned by banks on loans and other assets and what those assets 

would have earned if invested in riskless government securities. For other 

depository institutions, including savings institutions and credit unions, 

depositor services are measured using the spread between interest earned 

by the institution and interest paid to depositors. Mutual fund expenses 

consist of expenses of regulated investment companies, largely portfolio 

management fees and brokerage commissions, which reduce the value of 

assets held. These expenses are deemed to be paid by the mutual fund holders, and are allocated to households in proportion to their share of holdings. 

Also included in PCE for financial services are expenses incurred by pension 

funds, which are deemed to be paid by households with pension fund assets. 

In the CE, expenditures for pension funds are measured by contributions. 

Financial service charges, fees, and commissions consist of fees charged 

by depository institutions and credit card issuers, commissions on securities transactions, portfolio management and investment advisory services, 

and trust, fiduciary, and custody activities. Noncomparable fees charged by 

depository institutions and credit card issuers are primarily penalty fees, 

such as overdraft fees of banks and over limit and late fees of credit card issuers. Securities commissions include both those charged directly on securities 

transactions and indirect charges through markups or spreads on transactions by market makers. Investment counseling fees and trust, fiduciary, 

and custody fees are those charged on individual accounts, and portfolio 

management fees are those charged on individual accounts and by hedge 

funds whose investors are individuals.

The PCE for insurance that are not comparable to CE include 

expenses incurred by life insurance companies, premium supplements on 

 property- casualty insurance, household insurance premiums, cash benefits 

for property- casualty insurance, and income loss insurance.9

 Life insurance 

is measured in PCE by the expenses of life insurance companies in providing life insurance and annuity services, rather than by premiums, and for 

stock life insurance companies includes profits as well. In the CE, life insurance expenditures are measured by premiums paid. Premium supplements 

9. Employer contributions for health insurance and workers’ compensation have already been 

discussed as noncomparable third-party payments and are not considered here. 
Understanding the Relationship: CE Survey and PCE 193

included in PCE are earnings on technical reserves of property- casualty 

insurance policies. Household insurance premiums are noncomparable 

because they include only that portion of homeowners’ insurance premiums 

that cover household contents. Cash benefits for property- casualty insurance are a subtraction from premiums plus premium supplements and have 

no offset elsewhere in the PCE, unlike benefits for motor vehicle repair and 

health care. Premiums net of benefits of income loss insurance covering 

temporary disability are not comparable to CE.

Net purchases of used motor vehicles in PCE measure net purchases from 

other sectors through dealers and include dealer margins. They do not reflect person- to- person sales and can be alternatively measured as purchases 

from dealers less trade- ins and sales to dealers. The CE measure of used 

motor vehicles includes purchases from both dealers and persons and nets 

out trade- ins to dealers but not sales by persons. Using used motor vehicle 

sales by persons collected in the CE but not included in published CE total 

expenditures eliminates comparability differences between CE and PCE.

Owner- occupied housing is treated differently in PCE than in CE publications. In PCE, owner- occupied housing expenditures are defined as a 

service flow, and a space rental value is imputed to represent the value of 

that flow.10 (For the joint concordance, a rental equivalence measure is used 

for CE housing in order that the CE and PCE are more comparable.) In CE 

publications, owners’ out- of- pocket shelter expenditures are counted, which 

include mortgage interest and charges, property taxes, and maintenance, 

repair, insurance, and other expenses. In the NIPAs, these expenses are subtracted from the imputed rental value of owner- occupied housing to derive 

rental income of persons, a component of personal income. The rental value 

for owner- occupied housing remained in the range of 11 to 12 percent of 

total PCE throughout the 1992 to 2010 period, and accounted for about 

15 percent of the widening of the CE- PCE gap, though the net effect was 

about 11 percent, as the contribution of the homeowners’ expenses measured 

in the CE partially offset the PCE contribution. Using the estimated rental 

value of owner- occupied houses reported in the CE, but not included in CE 

published total expenditures, eliminates comparability differences. In the 

comparison of these measures, CE has been consistently higher than PCE.

Noncomparable expenditures in the CE are expenditures other than purchases of goods and services, and purchases that are measured differently 

than in PCE. Nonpurchases in the CE include interest payments, cash contributions including alimony and child support, contributions for Social Security and pensions, fees for licenses and registrations, and Medicare premiums. 

Purchases in CE that are treated differently than in PCE include homeowner 

10. See Garner and Short (2009) for a description of the PCE method of estimating rental 

equivalence of owner-occupied dwellings; this description is based on communications with 

staff at the BEA.
194 William Passero, Thesia I. Garner, and Clinton McCully

expenses, used car purchases, and insurance. In the NIPAs, nonmortgage 

interest is included in interest paid by persons, part of personal outlays along 

with PCE and net private remittances. Mortgage interest is an intermediate 

expense of homeowners subtracted from rental value in deriving rental 

income of persons in personal income. Contributions to charitable organizations and other nonhousehold entities in CE are not captured in personal 

outlays in the NIPAs, but are captured in household outlays in the disaggregated personal sector. Transfers between households, such as alimony and 

child support payments, are not captured in PCE because they are offsetting 

among households, since payments by one household are receipts by another 

household. In the CE, payments are part of expenditures and receipts are part 

of income. Social Security contributions are treated in the NIPAs as contributions for government social insurance and are not in PCE. Private pension 

and retirement plan contributions are part of personal saving rather than 

personal outlays in the NIPAs. Motor vehicle license and registration fees and 

similar fees imposed by government are not purchases of goods and services, 

but are treated in the NIPAs as personal current taxes, which are subtracted 

from personal income to derive disposable personal income. Medicare premiums are paid for enrollment in Medicare Part B medical insurance and Part 

D prescription drug coverage. These are treated as contributions for government social insurance in the NIPAs and are not part of PCE.

6.2.3 Measurement 

After removing coverage and comparability differences, remaining differences between CE and PCE are due to measurement differences for comparable items. Differences are to be expected, because the estimates are based 

on different sources: surveys of households for CE and reports by businesses 

that sell goods and services to households for PCE.11 What is noteworthy is 

that CE expenditures are below PCE by significant amounts, that such differences have been observed consistently across time, that the CE understatement 

is observed across almost all expenditure categories, and that these differences have increased significantly over time. Based on the BEA reconciliation 

described above, the aggregate CE value of comparable items decreased from 

75 percent of PCE comparables in 1992 to 62 percent in 2010, when the CE 

comparable value of $3,971.2 billion was $2,408.4 billion less than the PCE 

value of $6,379.6 billion. Most of the decrease in CE relative to PCE occurred 

from 1992 to 2003, during which the percentage decreased in 9 of the 11 years 

to 64 percent, 11 percentage points below its 1992 level. There was a small 

increase to 66 percent in 2009 before decreasing by 4 percentage points in 2010.

Explanations of the understatement of CE values relative to PCE have 

centered on the tendency to understatement of expenditures reported by 

households. Expenditure data reported by households are prone to under11. The PCE estimates make very limited use of CE values, accounting for about 0.5 percent 

of total PCE and 0.9 percent of comparable PCE. 
Understanding the Relationship: CE Survey and PCE 195

statement because of difficulties in recalling expenditures, the deliberate 

underreporting or nonreporting of certain types of expenditures such as 

“sin” commodities (e.g., alcohol, tobacco, gambling), and what is believed to 

be less than full compliance with the requirements of the diary survey, which 

asks for the daily recording of expenditures for small, frequently purchased 

items for two one- week periods. In addition, there may be a tendency to 

underreport expenditures of household members who are not the interview 

respondent. The PCE estimates are also subject to error, because of sampling and nonsampling errors in the source data, which come from Census 

Bureau surveys and censuses and from other public and private sources, as 

well as in some instances the lack of complete data for deriving estimates.

The understatement of CE expenditures for this exercise is consistent with 

observed differences, but what is not as clear is why there would be a significant widening of the gap between CE and PCE over time. One possibility 

is related to the significant decline in the response rate during the period 

in which the gap widened. The response rate for the CE interview survey 

declined by from 86 percent in 1990 to 74 percent in 2010. If the decline in the 

response rate were “randomly distributed” with respect to income and consumption, it would have little effect on measured expenditures. However, if 

the increased nonresponses were accounted for disproportionately by higher 

income and consumption households, this could help explain the widening 

disparities. No direct information bears on this question, but it is clear in 

breaking down the differences by category that the growth in the gap has 

varied considerably by commodity. By broad category, the largest contributor to the widening of the disparity between CE and PCE was expenditures 

for recreation and entertainment, which accounted for 22 percent of the 

increase in the CE- PCE disparity from 1992 to 2010.12 Within this category, major contributors were video and audio equipment, computers and 

peripheral equipment, and gambling. Also contributing significantly to the 

increased disparity, with contributions of about 10 percent each were food 

purchased for off- premise consumption, food services and accommodations, health care, and transportation. “Other goods and services,” including 

personal care, personal items, social services, professional and other services, 

and tobacco, accounted for about 10 percent of the increased disparity. 

Clothing, footwear, and related services accounted for about 6 percent of 

the increased disparity. Together, the cited categories accounted for more 

than 80 percent of the increase in the CE- PCE disparity.

6.3 Motivation for a Joint CE- to- PCE Concordance

The Bureau of Economic Analysis (BEA) introduced a new classification 

system for PCE in July 2009 with the 13th comprehensive, or benchmark, 

12. The categories used are PCE-functional categories shown in NIPA table 2.5.5, modified 

in some instances for better CE-PCE alignment.
196 William Passero, Thesia I. Garner, and Clinton McCully

revision of the National Income and Product Accounts (NIPAs).13 The new 

system is based on the Classification of Individual Consumption According 

to Purpose (COICOP), a United Nations standard used in many countries. 

The new PCE classification system included the separation of PCE into 

household consumption expenditures and final consumption expenditures 

of nonprofit institutions serving households (NPISHs) and the reclassification of many categories of expenditures, including food and financial services and insurance. With the new system, CE- to PCE- comparisons would 

be affected as well as alternative weighting schemes that were based on PCE. 

This change offered a unique opportunity to review the assignment of CE 

classification codes, UCCs, and PCE line categories in the underlying detail 

tables used previously for CE- to- PCE comparisons, and thereby to deconstruct the CE and PCE to assess the general assumption that CE estimates 

should match PCE estimates both in magnitude and trend.

Over many years, reconciliations of CE and PCE have been produced, 

but most of these have been the products of BEA and BLS working independently; thus, the assignment of CE and PCE item codes to expenditure 

categories for CE- to- PCE comparisons lacked the corroboration of the other 

agency. With the introduction of the new classification system, staff within 

the BLS and BEA decided to join together to validate the assignment of 

UCCs for future CE- to- PCE comparisons. The major output from this joint 

work is the development of a new concordance of CE and PCE expenditure 

groups that is supported by both the BEA and BLS. A comparison of CE and 

PCE estimates employing this new concordance is presented in tables 6.2A, 

6.2B, and 6.2C. In developing this concordance it was necessary to review the 

features of both the CE and PCE. These are outlined in the next section and 

are presented with regard to the work conducted by the BEA to reconcile the 

published CE and PCE regarding coverage, definitions, and measurement.

6.4 Joint CE- to- PCE Concordance

The new classification system for PCE introduced in 2009 forced BLS to 

revise the concordance it had established between UCCs and PCE line categories in BEA underlying detail tables that had been used to produce tables 

comparing aggregate estimates between the two sources. This too provided 

an opportunity for the BEA and BLS to develop a joint concordance. One of 

the features of the CE- PCE comparison tables is to show aggregate estimates 

for all expenditure categories and for comparable categories.

The new concordance reflects the addition of UCCs and the deletion 

of UCCs from previous concordances. In addition, approximately seventy 

UCCs exist whose expenditures should be allocated between PCE categories. 

13. See Kunze and McCulla (2008), McCully and Payson (2009), and McCully and 

Teensma (2008). 
Understanding the Relationship: CE Survey and PCE 197

Allocation proportions have been estimated for some of these UCCs and are 

reflected in the results presented in this chapter. More research is needed to 

determine the appropriate proportions for the remaining UCCs, and going 

forward, the frequency with which all these UCCs should be adjusted in 

producing a time series of comparison tables. Examples of comparables and 

noncomparables are presented below (see table 6.3).

The impact of this new joint concordance on CE and PCE estimates 

can be seen by examining tables 6.2A, 6.2B, and 6.2C, which show results 

for 1992 and 2010. Overall results are shown in each table with table 6.2A 

including those for durables, table 6.2B those for nondurables, and table 6.2C 

those for services. Overall, CE- to- PCE- ratios decreased from 70 percent to 

58 percent for all goods and services; the ratios for comparables from 84 to 

74 percent. The largest decrease was for comparable durables with a 1992 

CE- to- PCE ratio of 82 percent followed by a CE- to- PCE ratio of 62 percent 

for 2010. Among the largest declines in CE- to- PCE ratios in the durables 

category are for furniture and furnishings, sporting equipment and supplies, 

and jewelry and watches. Increases in the ratios are present for household 

appliances and photographic equipment; thus, there appears to be better 

reporting of expenditures in the CE for these by 2010 compared to 1992.

Aggregate CE expenditures as a share of PCE expenditures fell also for 

nondurables. Comparable CE nondurables represented about 70 percent 

of PCE expenditures in 1992 compared to 63 percent by 2010. Some of the 

most important declines are for food purchased for off- premises consumption, alcoholic and nonalcoholic beverages for off- premises consumption, 

apparel, tobacco, and newspapers and periodicals. On the other hand, CE- to 

PCE- ratios increased from 1992 to 2010 for pharmaceutical products and 

pets and related products.

Aggregate comparable CE and PCE service expenditures are the most 

similar in magnitude of the three categories of expenditures. For this analysis, reported rental equivalence from the CE is used rather than the shelter 

expenditures for owners; shelter expenditures are used in section 6.2 for 

the comparison of published CE aggregates to PCE aggregates. Aggregate 

expenditures for comparable CE services in 1992 accounted for 95 percent 

of PCE aggregates. However, by 2010 the ratio falls to 86 percent; the CEto- PCE ratio is still high, but falling. The CE and PCE services that are most 

comparable also have comparable aggregate expenditures; these include 

rents and utilities and imputed rents of owner- occupied nonfarm housing. Among the CE aggregate expenditures that have decreased over time 

relative to PCE expenditures are those for gambling, veterinary and other 

services for pets, purchased meals and beverages, and personal care services. 

Increases in CE- to- PCE expenditures, based on ratios, have resulted for 

services related to audio- video, photographic, and information processing.

A major factor affecting the analysis of these results over the 1992–2010 

period is the sharp drop in CE- to- PCE ratios that occurred between 2009 
Table 6.3 Examples of Consumer Expenditure Survey and personal consumption expenditures (PCE): Categories by comparability

UCC description PCE title Notes/commentsMattress and springs Furniture CE and PCE comparableOther bedroom furniture Furniture CE and PCE comparableSofas Furniture CE and PCE comparableRefrigerators, freezers (owned home) Major household appliances PCE comparable with CE estimate adjusted to account for movable 

appliances included with new homes

Washing machines (owned home) Major household appliances PCE comparable with CE estimate adjusted to account for movable 

appliances included with new homes

Tenant’s insurance Net household insurance CE and PCE not comparable. Measured as premiums plus premium 

supplements less expected (normal) losses.

School books/supplies & equip. for 

elementary/high school

Stationery and miscellaneous 

printed materials

CE and PCE not comparable. Contains items that can be assigned to four 

other PCE categories. Candidate for allocation in the future.
Understanding the Relationship: CE Survey and PCE 199

and 2010. The CE shows a drop in total expenditures from 2009 to 2010 of 

about $33 billion, while PCE shows an increase of over $379 billion. Based 

on recent history, there is reason to believe the PCE estimates for 2010 may 

be revised, leading to a change in the CE- to- PCE ratios.

The PCE data are typically revised as updated source data are received by 

the BEA. The 2010 PCE estimates used in the comparison came from the 

underlying detail table (table 2.4.5U from the BEA website) as of August 29, 

2011. Based on that table, the total durables, nondurables, and services estimate was $9.965 trillion. When the 2010 PCE data were first reported in the 

February 2011 Survey of Current Business, the estimate was $10.086 trillion, 

about $120 billion higher than the August estimate.

If one looks at the course of PCE estimates for 2009, the first PCE estimate for total durables, nondurables, and services reported in the February 

2010 Survey of Current Business was $9.827 trillion, a decline of about $24 

billion from 2008. This estimate then declined as of March 1, 2010, to $9.823 

trillion, on August 3, 2010, the estimate had dropped to $9.742 trillion, and 

on October 28, 2011, it had fallen to $9.586 trillion, the estimate used in 

deriving these ratios. In addition, these revisions increased the drop in PCE 

estimates between 2008 and 2009 from $24 billion to $165 billion.

Figures 6.1, 6.2, 6.3, and 6.4 show the trends in CE- to- PCE ratios from 

1992 to 2010. Ratios for all goods and services and those that are comparable 

based on the joint concordance are presented. The declines in CE- to- PCE 

expenditures are clearly visible in these. The ratios for nondurables are the 

most level over the time period (figure 6.4).

Fig. 6.1 Ratios of CE to PCE by year: Total
200 William Passero, Thesia I. Garner, and Clinton McCully

Fig. 6.3 Ratios of CE to PCE by year: Nondurables

Fig. 6.2 Ratios of CE to PCE by year: Durables

6.5 Summary and Future Directions

The joint CE and PCE concordance, developed recently by staff within the 

BEA and BLS, results in a comparison of CE and PCE aggregates that are 

more meaningful than concordances used in the past. Results show declines in 

CE survey expenditures compared to PCE aggregates, even while accounting 
Understanding the Relationship: CE Survey and PCE 201

for comparability. The good news is that CE- to- PCE ratios for nondurables 

are fairly consistent over time. The bad news is that expenditures for durables 

are diverging at a greater rate each year, though this assumes PCE estimates 

will not undergo future revisions. While services have been made more similar 

through the concordance, the trend in CE expenditures, relative to PCE, is 

declining.

Future research, focused on the PCE, includes delving into the decision-

 making process to allocate expenditures to PCE and examining in detail the 

quality of the underlying data. Within the BLS, attention to allocations of 

expenditures across PCE categories and methods to increase data quality 

will continue. Although the BLS program that produces the CE is noted 

for the quality of its customer outreach, planning tools and its willingness 

to assess its products critically, studies conducted inside and outside of the 

BLS indicate that underreporting remains a problem for some categories 

of expenditures. Updated comparisons with the PCE indicate that expenditures as measured in the CE are still less than similar expenditures in the 

PCE. The CE program is actively working to address underreporting problems. For example, the underreporting problem with income essentially was 

solved through the use of imputation (see Passero 2009). Other research on 

methods to reduce underreporting and nonresponse is discussed in Goldenberg and Ryan (2009), Fricker, Kopp, and To (chapter 12, this volume), 

and in documents available on the BLS Gemini website.14

14. Bureau of Labor Statistics, Gemini Project website, http://stats.bls.gov/cex/geminiproject.htm.

Fig. 6.4 Ratios of CE to PCE by year: Services
202 William Passero, Thesia I. Garner, and Clinton McCully

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