The Economy & the Fed

Consumer Spending

What households spend on goods and services, measured by the Bureau of Economic Analysis as personal consumption expenditures. It is about two-thirds of US gross domestic product, the largest part of the economy by far, so when consumers slow down, the economy usually does too. It is reported each month in dollars (“nominal”) and adjusted for inflation (“real”): if spending rose 0.5% but prices rose 0.3%, people bought only about 0.2% more stuff.

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