The Consumer Ex

p y enditure Surve

y 

Comparison: Focus on Personal Consumption Expenditures of the Consumption Expenditures of the

National Income and Product Accou

American Council on Consumer Interests49th Annual ConferenceAtlanta, GAApril 5 2003 April

5, 2003
CE to PCE Ratios: Averages Over 

Time (1992 b h k PCE) (1992

benc

hmark PCE)

0.81.01.20 20.40.60.00.2

otal food

beverages

s, related

perations

el G & S

portation

tainment

onal care

Reading

cco prod.

l

Tot

Alcoholic bev

Rent, utilities,

HH ope

Apparel

Transpo

Enterta

Person

Re

Tobacc

Miscel

1984 to 2000 1992 to 2000
Data Comparisons Team Data Comparisons Team

 Initial 

( )p micro

)

plan 

– choose expenditure category based on magnitude of d

between CE and PCE estimates where no a priori reas

difference was apparent

– examine derivation of estimates– evaluate the estimates– recommend further action

 Revised (macro/micro) plan 

– macro analysis of issues that affected many expenditu

macro analysis of issues that affected many expenditu

categories, evaluating impact of issues on CE and PCE 

– micro plan as above focusing on category-specific issu
Populations

 CE it  PCE: persons residen

: consumer units

– Civilian non-institutional 

population and some 

 PCE: persons residen

– Individuals

» Persons resident in U

physically located in 

institutional

– Continental U.S., Alaska, and 

Hawaii

physically located in 

have resided, or expin U.S. for 1 year or 

» Emp y lo ees of U.S. b

abroad for 1 year or 

» U.S. government civ

military personnel sab d dl f 

broad regardless of 

– Nonprofit institutions 

individuals Numbers of persons 2.1% less than represented by PCE

p y
Data So rces Data Sources

 CE: direct  PCE: indirect (commodit

tl id l) – Household Surveys

» Interview» Diary

mostly residual)

– Sources

» Government statistical re

G t d i i t ti 

– Sampling and 

non-sampling errors

– Imputation/allocation

» Government administrati

regulatory agency reports

» Reports from private orga

p » CE ( g motor vehicle leasing 

taxis, nursery schools, ch

– Interpolation/extrapolati– Revisions
Definition of Expenditures Definition of Expenditures

 CE - What consumers s

p 

end: transaction costs in

excise and sales taxes of goods and services acqduring reference period

– Primaril

y out-ofp p ( )p 

ocket ex

penditures 

(OOP

) re

ported 

consumers plus value of in-kind food and rent as pay, stamps

 PCE - V l f d d i h d b 

V

a

lue o

f goo

ds an

d serv

ices purc

hase

d

by 

personal sector including excise and sales taxes 

– Spent by individuals– Operating expenses of nonprofit institutions serving in

Operating expenses of nonprofit institutions serving in

– Value of food, fuel, clothing, rent of dwellings, and fi

services received in kind by individuals; and net purch

goods
Differences in Scope of Expenditu

Differences in Scope of Expenditu In scope for CE out of scope for PCE In scope for CE, out of scope for PCE

– Transactions between households (such as used ve

app ) arel

)

 In scope for PCE, out of scope for CE

– Value of home production for own consumption o– Standard clothing issued to military– Services furnished without payment by financial 

i t di i t lif i i

n

termediar

ies excep

t life 

insurance carr

iers

– Rental value of owner occupied dwellings and ow

appliances
Partly Out Of Scope For CE and 

Partl Defined Q ite Differentl Partly Defined

Q

uite Differentl

y

Health Care Expenditures Health Care Expenditures

– CE medical care OOP; PCE medical care expendit

by households, insurance companies, employers, aby households, insurance companies, employers, aprofits (=current expenditures of non-profits+paympatients to profit and government facilities)

Reli

gious and Welfare

– CE cash contributions; PCE religious and welfare 

i l di hild (f fit t inc

l

uding child care (for nonprofits=curren

t expen

of receipts for commodities; for profit and gov’t=rfrom users) 
Defined Quite Differently Defined Quite Differently

 Education Expenditures

– CE ed cation OOP CE ed

ucation OOP

– PCE education and research expenditures made by househo

profit and non-profit institutions serving households (for pri

expenditures net of receipts for meals etc and for gov’t stuexpenditures net of receipts for meals, etc. and for gov’t

=stu

payments; fees paid to other schools plus current expenditur

 Life Insurance and Pension Plans

– CE premiums paid and consumer contributions OOP– PCE expense of handling: operating and administrative exp

premiums paid net of benefits and dividends profits of sompremiums paid net of benefits and dividends, profits of som

 Owner-Occupied Housing Expenditures

– CE expenditures for owner occupied housing (interest and 

CE expenditures for owner occupied housing (interest and 

property taxes, maintenance and repairs, and other expenses

– PCE imputed space rent
CE to PCE Aggregate Expenditures

(billions of dollars)

1992 

( ) billions

) 1997 

( ) billions

) 

Total CE $2,788 $3,553 Total PCE $4,210 $5,529 

% Total 66% 64% 

Total CE Comparable

$2,107 $2,490 

Total PCE Comparable

$2,369 $3,117 

% Comparable % Comparable 89% 80% 

CE Comparable as % of CE Total

76% 70% 

PCE C bl 56% 56% PCE

Comparable as 

% of PCE Total

56% 56% 
CE Integrated/PCE Ratios: CE Integrated/PCE Ratios: C 

ompa

1.001.20 1992 1997 20000.600.800.200.400.00

all comparable all comparable all comparable all c

All items Durables Nondurables Serv
Analytical Example Analytical Example

1992 E dit f A 1992

Expenditures 

for 

Appa

in the CE and PCE in the CE and PCE
Expenditures for apparel, total and by maj

item cate

gor

y, 1992 CE d PCE CE an

d PCE

Item category

Annual expenditu

(millions of dollar

CE Total

b l

$143,970

Men’s & 

boys’ apparel $

Women’s & girls’ apparel

Apparel for children under 2

$4

6

Footwea

r 2

PCE Total

Cl thi f l

$212,259

Cl

othing 

for males $6

Clothing for femalesClothing for infants

Sh

$610

3

Shoes 3
Derivation of CE Estimates Derivation of CE Estimates

 Diary survey is the source for about 63 per

aggregate apparel expenditures, while the Interview survey accounts for the remaininInterview survey accounts for the remainin

percent

 Individual ex

p pg enditure re

ports ori

ginate in 

ways.

– Directly reported by respondent– All ti f dit h d t 

Allocation o

f expenditures w

here respon

den

t r

expenditure for a combination of items

– Imputation of expenditures where respondent

acknowledges purchase, but does not provide 
Derivation of PCE Estimates Derivation of PCE Estimates

 Process uses data created for preparation o

output accounts for U. S.

 The benchmark purchasers’ value of goods 

services is calculated to determine allocabservices is calculated to determine allocaboutput.

 Total purchasers’ value is allocated among

intermediate and end users.
Amount of value added to total apparel 

esti b f 1992 PCE imate by

factor, 1992 PCE

Factor

Value added

(millions of dollars) (millions of dollars)

Total $238,843

Basic value

Transportation costs

$119,114

Transportation costs 3 369Wholesale marginWholesale taxes

3,369

21,286

163

Retail marginRetail taxes

84,86010,051
Allocation of apparel, 1992 I/O Accounts 

(millions of dollars)

Allocation of Production

Basic 

value

Whole.

margin

Trans. 

cost

Comm & 

whole. taxes

Retail 

margin

R

t

Exports

Intermediate production

5,4224 934

1,2573 609

356

1 937

2

27

Intermediate production Government purchases & sales –

Federal

Government purchases & sales – State

& local

4,934

625

1,607

3,609

111

295

1,937

1753

27

14

Change in intermediate goods

inventories

Unspecified costsChange in wholesale inventoriesChan

ge in retail inventories

44

1,768

841

3,260

11

253148460

9

272836

1234

g 

Gross private fixed investmentUnallocated output

-337

290

151

35

5418

62
Production and allocation of apparel, 1992 

Accounts 

– cont. 

(millions of dollars)

Allocation of Production

Basic 

value

Whole.

margin

Trans. 

cost

Comm & 

whole. taxes

Retail 

margin

R

t

PCE Clocks, Lamps & Artwork

PCE Sporting Equipment

45

3

01

00

00

12

PCE Sporting EquipmentPCE Vehicle Accessories & PartsPCE Jewelry & WatchesPCE Lighting SuppliesPCE Other Personal Hygiene Products

3

-65

-765

4743

1

-54

0

1715

0

-29

065

00011

200

4330

PCE Food in Off-Premise Food 

Purchases

PCE MagazinesPCE Laundry & Garment RepairPCE Semi durable Housefurnishings

-721-295

562

22

0007

0002

0090

000

15

PCE Semi-durable Housefurnishings PCE Military ClothingPCE Sewing Goods for MenPCE Apparel

22

205

10

101,570

7

25

4

14,941

201

849

000

100

15

09

84,760

1

119,11

5 21,286 3,369

163

8

4,860

1

9, 5 , 86 3,369 63 8 ,860 
E al ation of CE and PCE Estima

E

val

uation of CE and PCE Estima

Standard errors and confidence 

intervals

Expert judgment Expert judgmentContent difference in component 

categories
Standard error and 95% confidence interv

t t l l dit 1992 CE t

o

t

a

l appare

l expenditures, 1992 CE

It

Value

em (millions of dollars) (millions of dollars)

Total apparel $143,970Standard error Standard error $4 598 ,95% confidence intervals

U li it Upper li

mit $152 982 $152,982

Lower limit $134,958
Expert Judgment Expert Judgment

Data adjustment in CE 

– Allocation procedures Allocation procedures– Imputation procedures

Trade margin calculation in PCE

– Wholesale – Retail
Impact of data adjustment procedures on a

esti t 1992 CE tima

tes, 1992 CE (millions of dollars)

Item

Total 

expenditure

Allocated 

expenditure

% 

Allocated

Impute

expenditu

Total apparel Total apparel $143 970 $143,970 $21 022 $21,022 14 6%. $

Men’s & boys’ 45,018 7,901 17.6% 

Women’s & girls’ 68,056 9,412 13.8% 

Children under 2 7,772 1,092 14.1% Footwear 23,124 2,617 11.3% 

* Imputed expenditures include both strictly imputed and imputed and allocated expe
Calculation of Wholesale Trade Marg

PCE E ti t PCE

E

stima

tes

 Initial margin estimate is computed for wholesaler

primary business is apparel from cost of goods soreceipts and inventory adjustments receipts, and inventory adjustments.

 Margin estimate for wholesalers whose primary b

is apparel needs to be adjusted is apparel needs to be adjusted.

 CWT data do not distinguish between apparel and 

apparel operations. apparel operations.

 A harmonization procedure is used based on sales 

data which is available for all businesses engaged data which is available for all businesses engaged 

apparel trade.
Calculation of Wholesale Trade Marg

PCE E ti t PCE

E

stima

tes 

– con

t.



Ideally, the trade margin generated by appl

the rates of commodity lines handled by ap

wholesalers

= the trade margin derived by the trade margin derived by

evaluating purchases, costs, and inventory adjustments.

 In practice, the trade margins are not equal

adj g ustments are made to the mar

gin rates fo

commodity lines and kinds of businesses umargins are harmonized.
Calculation of Wholesale Trade Marg

PCE E ti t PCE

E

stima

tes 

– con

t.

 Effect of this harmonization procedure

– Mar

g p, 

in based on 

purchases, costs and inventor

adjustments is $17,341 million

– Harmonized margin calculated by harmonizati

proced i $21 286 illi dure 

is $21,286 million

– Procedure results in 22.7% increase in apparel 
Examples of content differences in 

component categories of apparel component categories of apparel

 PCE includes athletic footwear for participant spo

apparel. CE includes such footwear in recreation expenditures. (Currently we cannot isolate these expendi

(Currently we cannot isolate these expendi

either PCE or CE to make an adjustment to the aggregates.)

 PCE includes umbrellas in apparel. CE can assign 

umbrellas to apparel if reported as clothing accessoutdoor equipment if reported as patio umbrella, ogeneral sports equipment if reported as golf umbre
Summary of Evaluation Summary of Evaluation

 Differential between 1992 CE and PCE estimates - $6

– If true CE estimate at upper end of confidence interval - $9 – If true PCE wholesale and retail trade margins were based on 

pre- and post-harmonized estimates - $2.8 billion

– Though we have no estimates of effects, it is unlikely that BL

allocation/imputation procedures or differences in the contencategories has appreciable impact on expenditure differential

 Remainin

g differential - approx. $56 billion

 Change in ratio of CE-PCE apparel estimates - 68% 

→ 
Future Work Future Work

Update apparel analysis for 1997 using n

Update apparel analysis for 1997 using n

benchmarked PCE data

Conduct analysis similar to apparel for 

entertainment expenditures

Review and revise concordance of CE an

items for published comparison tablesitems for published comparison tables
Future Work Future Work – cont.

Examine other factors that potentially sh

Examine other factors that potentially sh

on differences between CE and PCE esti

– proxy response (BRPD)– quantity information (apparel)– usage of db d records by respondents

– assessment of instrument (Diary)

– response rates