Frequently Asked Questions

Guidelines for Citing BEA Information | ID: 551 | Created: May-28-2010
Answer

How is the Federal Rebates for Energy Star Appliances program (popularly called “Cash for Appliances”) reflected in the National Income and Product Accounts (NIPAs)?

The American Recovery and Reinvestment Act of 2009 provided $300 million for rebates toward the purchase of energy efficient appliances.  The program is funded by the federal government and is administered by the states, with the starting dates and terms of the program varying from state to state.  Many states started their programs during April or May of 2010.  Typically, after a state begins its program, consumers reserve rebate allotments for qualified appliances and then purchase the appliances within a specified time period.

The NIPAs record the payments from the federal government to state governments as grants-in-aid.  The rebates paid by the states to retailers are recorded as subsidies.  Purchased appliances that are major replacements (such as water heaters, heat pumps, or central air conditioners) are recorded as private fixed investment (PFI) in residential "improvements."  Other purchased appliances, such as dishwashers, are recorded as personal consumption expenditures (PCE) for goods.  The NIPA treatment of these rebates is similar to the treatment of the federal Consumer Assistance to Recycle and Save Act of 2009, the so-called "Cash for Clunkers" program .

The effects of the federal Cash for Appliances program are not fully reflected in the source data underlying BEA's estimates of PCE or of PFI.  The source data that BEA uses for estimating PCE for most goods under the retail control method exclude sales by building materials and garden equipment and supplies dealers, which account for a significant portion of appliance sales.  (The retail control method excludes these dealers because their total receipts are not primarily from households but from businesses; the relevant sales to households are fully captured as PCE through the benchmarking process that takes place every five years.)  Because the retail control method would miss some of the appliance sales associated with the Cash for Appliances program, judgmental adjustments based on the allocation of state rebates by type of appliance were made to the estimates of PCE for "major household appliances" for the months of the second quarter of 2010.  A similar adjustment will be made to the estimate of PFI in residential improvements for the second quarter of 2010.
 

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