The personal consumption expenditure is assigned as domestic consumptions defined for some time. The readings of personal consumption expenditures, personal income and PCE Price Index are released monthly basis in the Bureau of Economic Analysis’ (BEA) Personal Income and Outlays report. The PCE Price index measures the change in the price of consumer goods and services in the United States economy.
The personal consumption expenditure is leading inflation directory used by the U.S. Federal Reserve when making the decision of monetary policy. The PCE Price Index is comparable to the CPI Index, which is also emphases on the price of consumer goods and services. Some other indexes of inflation such as the GDP Price Index and Producer Price Index, are also tracked by the economists.
The personal consumption expenditure is breakdown into goods and services, while goods are split into durable and non-durable goods. Each month the Bureau of Economic Analysis (BEA) reports the total values of durable goods, non-durable goods and services. Usually items those typically carry a larger price tag and last for more than three years such as televisions, cars, furniture’s, refrigerator and other similar items.
Non-durable goods are considered as temporary, which include items that last for less than three years. Such objects typically carry a small price tag and are less costly such as gasoline, makeup and clothing.
When measuring the overall economic stability and inflation, the U.S. Federal Reserve has a preference to use the personal consumption expenditure price index rather than the consumer price index. However, the consumer price index is the most recognized economic indicator that typically gets a lot more consideration from media. The United State Federal Reserve prefers the personal consumption expenditure price index because it is composed of a wide range of expenditures.