Personal Consumption Expenditures, pre- and post-Covid

Comparing real, inflation-adjusted personal consumption expenditures before and after the Covid pandemic, attempting to remove the effect of the pandemic.

The Bureau of Economic Analysis, a division of the United States Department of Commerce, produces data about the U.S. economy. This data tells us about the real, that is, inflation-adjusted situation of the economy.

BEA collects data on consumer expenditures. “Personal consumption expenditures (PCE) is the primary measure of consumer spending on goods and services in the U.S. economy. It accounts for about two-thirds of domestic final spending, and thus it is the primary engine that drives future economic growth.” ⁽¹⁾BEA. Consumer Spending. https://www.bea.gov/data/consumer-spending/main This data is published monthly.

The pandemic, or rather the response to it, created a large disruption in economies. Is it possible to eliminate or reduce its effects? This is an important question, as politicians of both parties make varying claims about the economy during their administrations. There are several approaches involving the selection of time frames for comparisons, and selecting these greatly informs the outcome of analysis. ⁽²⁾See:
Competing Narratives on Real Wages, Incomes Under Biden

I created two periods of time: Pre-pandemic and post-recovery. I ended the first period when the trend of real PCE was at its highest level before the pandemic. This was February 2020. I started the second period when the level returned to near the pre-pandemic level, which was January 2021. Graphically, this is shown in Chart 11. (Click illustrations for larger versions.)

Point A to B is the Trump administration before the pandemic. During this period, real personal consumption expenditures rose by an average of $29.1 billion per month, or 0.22%.

Point C to D is the Biden administration starting when values returned to the pre-pandemic level and continuing to the present. During this period, expenditures rose by an average of $43.4 billion per month, or 0.31%. Table 11 shows details.

The pandemic caused a big dip in consumer spending, but it started recovering quickly after 2020. Spending under Trump grew steadily before the pandemic, but it accelerated during Biden’s presidency after the economy recovered from the pandemic shock.

As of August 2024, consumer spending is at its highest point in the period shown on the chart, reflecting a strong economic recovery and growth.