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And finance Allah shmoop What is personal consumption expenditure Well

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consumer spending makes up a big part of the U

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S economy an estimated two thirds of it to be

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exact Tracking consumer spending is a key to tracking the

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overall economy Will the personal consumption expenditure is the formal

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way to measure consumer spending Right So first what is

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it consumer spending Example you work at Smooshy Love No

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not that kind of company It's a company that makes

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heart shaped pillows people by the pillows for you know

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birthdays and Valentine's Day as a reward for getting their

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annual cardiovascular checkups You know stuff like that All the

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money spent on the pillows pays your salary Customers pace

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mushy love for the pillows Smoochy Love gives some of

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that money to you in the form of a paycheck

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Then your paycheck allows you to buy a host of

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other consumer goods You buy food and gas and clothes

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and electronic toothbrushes and Christmas tree shaped pillows for holiday

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gifts and or Arbor Day decorations You know stuff like

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that Some of the money you spend on this stuff

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eventually goes toe workers at the companies who make those

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products These workers then spend that cash on other stuff

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and so on It's the economic circle of life all

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right well that consumer spending cycle is what represents two

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thirds of the economy something like nine trillion dollars a

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year So the spending on consumer goods is crucial Economists

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and policymakers need a way to track all that spending

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It allows them to see how things are going and

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to make predictions about overall economic growth Enter the P

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C E or personal consumption expenditure Tracker Here It's the

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fancy name for all that money you spend on knickknacks

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and doodads and services to like you know consumer spending

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includes stuff like oil changes You get for your car

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and doctor visits where you turn your head and cough

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and you know a back hair Electrolysis Personal consumption expenditure

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is the official stat for measuring consumer spending Any economy

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in the US The figure is compiled monthly by the

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Department of Commerce Will the same report also includes details

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on personal income and disposable personal income Two measures of

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you know how much money people make right So the

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government looks at how much smooshy love is paying you

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and how much of that money your spending while the

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PC also helps to track changes in price's Along with

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the income and spending data the government issues what's called

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the P C E price index It shows how much

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prices for consumer goods have changed during that period Well

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the index measures retail inflation basically or deflation of prices

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go down smooshy love overproduced heart pillows ahead of Valentine's

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Day Now it's March and they've got a warehouse full

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of them Then they drop prices Just a blowout inventory

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Well that drop in prices would show up in the

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PC price index It's mushy Love is now facing lower

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revenue for this month Own theory Maybe they cut your

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salary which then shows up in the government report in

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the personal income section Now you have less money to

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buy other goods and you spend less on clothes and

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back hair electrolysis and well that lower spending shows up

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in the PC east at the Now We gotta go

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find someone else to tweeze are back hair with a 00:03:12.688 --> [endTime] discount Get out

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