1. Personal Consumption Expenditures New Classification System Clint McCully, Chief Consumption Branch, NIWD National Economic Accounts Data Users’ Conference April 13, 2007

2. www.bea.gov 2 PCE Classification Background  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

3. www.bea.gov 3 New PCE Classification What 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

4. www.bea.gov 4 New PCE Classification What 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

5. www.bea.gov 5 PCE Classification Overview Structure Major aggregates……. Sub-aggregates …….. Categories……… (time series) Commodities ……. (I/O) Items ……… (I/O) Classification types  Type of product — by durability  Type of expenditure — by purpose  Correspondence at the category level

6. www.bea.gov 6 New PCE Classification Incorporation  2002 I/O benchmark estimates  Functional classification  Released in 2007  Benchmark estimates in 2008  Time series back to 1929

7. www.bea.gov 7 PCE Functional Classification: New and current CURRENT 1.Food and tobacco 2.Clothing, accessories, and jewelry 3.Personal care 4.Housing 5.Household operation 6.Medical care 7.Personal business 8.Transportation 9.Recreation 10.Education and research 11.Religious and welfare activities 12.Foreign travel by U.S. residents NEW Household Consumption Expenditures 1. Food and non-alcoholic beverages 2. Alcoholic beverages and tobacco 3. Clothing and footwear 4. Housing, water, electricity, gas and other fuels 5. Furnishings, household equipment and routine household maintenance 6. Health 7. Transportation 8. Communication 9. Recreation and culture 10.Education 11. Restaurants and accommodation services 12. 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 5547.4 5440.4 421.5 115.4 263.8 999.1 268.1 932.8 634.4 121.6 521.9 98.3 340.6 427.6 326.0 -21.1 107.3 5547.4 850.0 337.4 82.9 842.6 616.2 1002.8 412.9 685.2 474.5 129.7 134.2 -21.1 No change in total

8. www.bea.gov 8 PCE Functional Classification: New and current CURRENT 1.Food and tobacco 2.Clothing, accessories, and jewelry 3.Personal care 4.Housing 5.Household operation 6.Medical care 7.Personal business 8.Transportation 9.Recreation 10.Education and research 11.Religious and welfare activities 12.Foreign travel by U.S. residents NEW Household Consumption Expenditures 1. Food and non-alcoholic beverages 2. Alcoholic beverages and tobacco 3. Clothing and footwear 4. Housing, water, electricity, gas and other fuels 5. Furnishings, household equipment and routine household maintenance 6. Health 7. Transportation 8. Communication 9. Recreation and culture 10.Education 11. Restaurants and accommodation services 12. 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 5547.4 5440.4 421.5 115.4 263.8 999.1 268.1 932.8 634.4 121.6 521.9 98.3 340.6 427.6 326.0 -21.1 107.3 5547.4 850.0 337.4 82.9 842.6 616.2 1002.8 412.9 685.2 474.5 129.7 134.2 -21.1 New categories Disappearing Categories

9. www.bea.gov 9 PCE Functional Classification: New and current CURRENT 1.Food and tobacco 2.Clothing, accessories, and jewelry 3.Personal care 4.Housing 5.Household operation 6.Medical care 7.Personal business 8.Transportation 9.Recreation 10.Education and research 11.Religious and welfare activities 12.Foreign travel by U.S. residents NEW Household Consumption Expenditures 1. Food and non-alcoholic beverages 2. Alcoholic beverages and tobacco 3. Clothing and footwear 4. Housing, water, electricity, gas and other fuels 5. Furnishings, household equipment and routine household maintenance 6. Health 7. Transportation 8. Communication 9. Recreation and culture 10.Education and research 11. Restaurants and accommodation services 12. 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

10. www.bea.gov 10 PCE Functional Classification: New and current CURRENT 1.Food and tobacco 2.Clothing, accessories, and jewelry 3.Personal care 4.Housing 5.Household operation 6.Medical care 7.Personal business 8.Transportation 9.Recreation 10.Education and research 11.Religious and welfare activities 12.Foreign travel by U.S. residents NEW Household Consumption Expenditures 1. Food and non-alcoholic beverages 2. Alcoholic beverages and tobacco 3. Clothing and footwear 4. Housing, water, electricity, gas and other fuels 5. Furnishings, household equipment and routine household maintenance 6. Health 7. Transport 8. Communication 9. Recreation and culture 10.Education and research 11. Restaurants and accommodation services 12. 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

11. www.bea.gov 11 PCE Product Classification NEW StructureCURRENT 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 items Motor vehicle parts & accessories Personal items Other nondurable goods Purchased food, beverages and tobacco Gasoline and other energy goods Other nondurable goods, n.e.c. Durable Goods Motor vehicle and parts Furniture and household equipment Other Nondurable Goods Food Clothing and shoes Gasoline, fuel oil & other energy goods Other 557.6 254.0 130.8 99.7 73.2 1465.0 473.8 249.3 114.4 58.3 39.1 12.8 991.2 537.0 147.7 306.6 692.7 305.1 256.2 131.4 1619.0 796.2 258.1 147.7 416.9 1997 To semidurables Purchased meals to services New categories

12. www.bea.gov 12 PCE Product Classification (cont.) NEW StructureCURRENT Structure Services Housing Household operation services Transportation services Medical care services Recreation services Other services Services Household consumption expenditures Housing and utilities Health care Transportation services Recreational and cultural activities Restaurants and accommodation services Insurance and other financial services Other services Final consumption expenditures of nonprofit institutions serving households 3524.8 3417.6 975.9 803.8 206.9 213.9 340.6 427.6 448.9 107.2 1997 3235.8 842.6 337.0 245.7 873.0 215.1 722.4 New categories

13. www.bea.gov 13 PCE Product Classification NEW StructureCURRENT Structure Durable Goods Motor vehicles Recreational equipment & vehicles …….. Nondurable Goods Semidurable goods Motor vehicle parts & accessories …….. Other nondurable goods …….. Services ……. Durable Goods Motor vehicle and parts Furniture and household equipment Others Nondurable Goods Food Clothing and shoes Gasoline, fuel oil & other energy goods Others Services Housing Household operation services Transportation services Medical care services Recreation services Other services 254.0 9.2 41.9

14. www.bea.gov 14 PCE Product Classification NEW StructureCURRENT Structure Durable Goods …….. Nondurable Goods Semidurable goods Other nondurable goods Food and non-alcoholic beverages Alcoholic beverages & tobacco …….. Nondurable recreational items, n.e.c. …….. Services …….. Restaurants & accommodation ……. Durable Goods Motor vehicle and parts Furniture and household equipment Others Nondurable Goods Food Clothing and shoes Gasoline, fuel oil & other energy goods Others Services Housing Household operation services Transportation services Medical care services Recreation services Other services