The CE and the PCE: a comparison: an analysis of a decline in the ratios of aggregate spending for various categories of expenditures from the BLS Consumer Expenditure Survey and the BEA's Personal Consumption Expenditures over an 11-year period employs a new methodology that takes into account the degree of comparability of those categories

Monthly Labor Review, Sept, 2006 by Thesia I. Garner, George Janini, William Passero, Laura Paszkiewicz, Mark Vendemia

Exhibit 1. Trends in CE-to-PCE ratios, by expenditure groups, 1984-2002

Decreasing

1984-2002 ratio [greater than or equal to] 0..8:
Food away from home
Rented dwellings
Telephone services
Children under 2 years
Transportation
Vehicle purchases
Utilities, fuels, and public services

1984-2002 ratio = 0.6-0.8:
Food, total
Household operations
Household furnishings and equipment
Men's and boys' apparel
Women's and girls' apparel
Televisions, radio, and sound equipment
Personal care products and services

1984-2002 ratio = 0.4-0.6:
Housekeeping supplies
Apparel and services
Maintenance and repairs
Other vehicle expenses
Entertainment
Fees and admissions

1984-2002 ratio = 0.4-0.6:
Pets, toys, and playground equipment
Other entertainment supplies and equipment
Reading

Tobacco products and smoking supplies

1984-2002 Ratio < 0.4: Alcoholic beverages
Other apparel products and services
Miscellaneous

Stable

1984-2002 ratio [greater than or equal to] 0.8:
Rent, utilities, and public services
Utilities, fuels, and public services

1984-2002 ratio = 0.6-0.8: Food at home

1984-2002 ratio = 0.4-0.6: Public transportation

Increasing

1984-2002 ratio = 0.6-0.8: Footwear
Vehicle rental and other charges

After reviewing the historical comparison methodology, the BLS team decided that revisions were in order. Accordingly, this article describes the development of a new comparison methodology based on (1) knowledge gained from the results of earlier comparisons, (2) a deeper institutional understanding of the CE and the PCE gained from working with these data over time, and (3) recent work presented in the economics literature. The new methodology uses a different item classification scheme, reallocating detailed CE data to PCE categories by major type of product (that is, durables, nondurables, or services) instead of by type of expenditure (for example, food, transportation, or medical care). A more detailed description of the categories of items from the CE and the PCE is utilized than was used when the historical comparison methodology was developed. Consequently, more comparable product categories are constructed and are included in the final aggregates and ratios used in the newer comparison of the two sets of estimates.

The new framework should provide more usable, accurate comparisons for researchers examining consumption growth and changes in the inequality of consumption over time. For comparisons of consumption, researchers have most often focused on nondurables or services; (8) the new methodology will facilitate this work.

Using the new methodology on data for categories that are comparable between the CE and the PCE reveals that CE aggregate expenditures are 86 percent of PCE aggregate expenditures for 1992, drop to 85 percent in 1997, and fall further to 81 percent in 2002. When all categories of items, both comparable and noncomparable, are included, CE aggregate expenditures are 67 percent of PCE aggregates in 1992, 65 percent in 1997, and 60 percent in 2002.