Explaining the 30-Year Shift in Consumer Expenditures from Commodities to Services, 1982-2012

The last 30 years have seen a shift in the allocation of U.S. consumer expenditures from commodities to services. This article uses Consumer Expenditure Survey (CE) data and Consumer Price Index (CPI) "relative importance" and index data (1) to show that the shift has been driven by changes not only in price but also in quantity and (2) to identify the particular categories of services driving the overallshift to services consumption. Focusing on absolute changes in per-household expenditures during the period 1984-2011, the article finds a 9.1-percent increase in the quantity of services and no change in the quantity of commodities. This trend has been driven largely by a considerable increase in owneroccupiedshelter. The article also finds that the quantity of health care services has decreased, althoughthe share of personal consumption expenditures (PCE) accounted for by health care services, asmeasured from 1959 to 2009 by the U.S. Bureau of Economic Analysis (BEA), has increased. Thisdifference illustrates that PCE data account for third-party expenditures, while CPI and CE data donot. Within commodities, the quantity of durable goods has increased, while the quantity ofnondurables has decreased.