In the U.S. economy, two-thirds of production and

expenditures are devoted to consumer spending, or personal consumption expenditures (PCE), which include most of retail sales, as well as households’ expenditures on such items as rent, utilities, and much of medical care. Because this is such a large sector of the economy, the forecast accuracy of PCE affects the forecast accuracy of some of the key variables that policymakers focus on, such as unemployment, incomes, inflation, and interest rates. A large body of research has documented that measures of income, wealth, and interest rates, which indicate consumers ’ ability to spend, do consistently help forecast future consumer spend-ing.The research results are less consistent, however, for forecast models that also include measure