Real Consumer Spending QoQ

Real Consumer Spending QoQ is the percent change from the prior quarter in real personal consumption expenditures (PCE), spending adjusted for price change. The Bureau of Economic Analysis (BEA), a Commerce agency, publishes it in the National Income and Product Accounts (NIPAs), a compilation with no household survey. It appears in Tables 1 and 2 of the gross domestic product (GDP) release, seasonally adjusted at annual rates, quarterly since 1947. It covers goods and services bought by resident persons, meaning households plus nonprofits, at market prices with sales taxes, including third-party-funded care and imputed rents.

PCE accounts for about 70% of domestic final spending and is the primary engine of growth. It is not production, retail sales, or the PCE price index, the inflation gauge, and it excludes home purchases. Arabic outlets often use similar names for the core price variant.

Quarters run January through March, April through June, July through September, and October through December. Advance, Second, and Third estimates arrive at 8:30 AM Eastern Time. Advance arrives 25 to 30 days after quarter end, Second about two months after, and Third 3 months after on fuller data. Shutdowns can shift dates.

The release also shows GDP growth, price indexes, income, and profits. Estimates revise in either direction from Advance to Third, then each September for at least 5 years. Comprehensive updates revise many years about every 5 years. There is no target, so moves read as stronger or weaker demand through contributions to GDP growth.

Moves come from durable goods, nondurable goods, services, and nonprofit spending, with health care, food services, vehicles, and clothing often leading.

• Durable goods: items lasting 3 years or more, covering vehicles and parts, furnishings, recreational goods, and other durables.

• Nondurable goods: items lasting under 3 years, covering off-premises food and drinks, clothing and footwear, gasoline, and other consumables.

• Services: nonstorable purchases used at purchase time, covering housing and utilities, health care, transport, recreation, food services and finance, the largest share.

• Nonprofit spending (NPISHs): final consumption by nonprofits serving households, measured from operating costs less sales.

In the third estimate of September 30, 2020, real PCE fell 33.2% at an annual rate in Q2, after a 6.9% drop in Q1. Services drove the fall with 41.8%, led by health care, while goods fell 10.8%, led by clothing and footwear. Durables slipped only 1.7% against 15.0% for nondurables. PCE subtracted 24.01 points from a 31.4% GDP drop.

In the advance estimate of October 29, 2020, PCE rebounded 40.7%, adding 25.27 points to a 33.1% GDP gain. Goods jumped 45.4% on durables up 82.2%, with motor vehicles and clothing leading, while services rose 38.4% on health care and food services. Nondurables rose 28.8%. The pair shows annualized rates magnify quarterly moves of about 9 to 10 percent, and revisions can lift estimates on fuller data.

1. Current-dollar detail: Build detailed spending in current prices across many categories, using commodity-flow methods in benchmark years and retail and services surveys between them.

1. Seasonal adjustment: Remove regular seasonal patterns using source adjusted data or X-13ARIMA-SEATS with concurrent factors, then force quarters to match annual totals.

1. Deflation to real terms: Divide each component by a matched price index, often a Consumer Price Index (CPI) component. This removes price change and leaves quantity change.

1. Fisher aggregation: Combine components with a Fisher index, a geometric mean of Laspeyres and Paasche quantity indexes using 2 adjacent quarters.

1. Chained dollars and annual rates: Scale the index so 2017 equals 100 and express levels times 4 as annual rates. Annualize quarterly change by compounding for 4 quarters. For example, an index rise from 120.00 to 121.80 is 1.5% in the quarter and 6.1% annualized.

1. Contributions: Split GDP growth into points from each component so parts sum exactly to the total.