Surprising Trends in American Spending Habits You Need to Know

Posted by Admin November 22, 2024 Shopping

Consumer spending consistently accounts for about 70% of the U.S. economy. What Americans buy with all of that consumption is divided into two major categories: First, there’s non-discretionary spending on necessities such as food, medicine, housing, and clothing. Second, there’s discretionary spending, which includes all non-essential goods and services. The data below provides a reasonably accurate picture of the nation’s amusements and entertainment, it’s interests, hobbies, indulgences and vices.

Key Takeaways

Consumer spending is refers to all consumption final goods and services for current personal and household use, and includes both necessities and discretionary purchases.
Consumer spending, on whole, is more than $13 trillion, making up around 70% of the American GDP.
In 2022, the average expenditure per American was $72,967.
In 2022, the average expenditure per American increased 9% year-over-year from 2021.

Consumer Spending: An Overview

In 2022, the average annual expenditures for all consumer units in the United States increased by 9%, reaching $72,967, according to the U.S. Bureau of Labor Statistics. During the same period, the Consumer Price Index (CPI) for all urban consumers by 8% and average income before taxes grew by 7.5%.

The breakdown of these expenditures reveals that housing was the largest component, accounting for 33.3% followed by transportation at 16.8%. A number of aggregated categories added up to less than 5% total including miscellaneous, personal care products and services, alcoholic beverages, tobacco products and smoking supplies, and reading.

As you read through the year-over-year changes, consider how fragile and unique the global economy was in 2021. The year-over-year changes from 2021 to 2022 marked a unique transition into the post-pandemic world, often yielding results dramatically different from “normal” economic conditions.

Consumer Spending in Specific Categories

Below are the major spending categories the BLS aggregates and tracks statistics on. Note that as of October 2023, the most recent annual data from the BLS covers calendar year 2022. The statistics below cover not only the spend for that year but the year-over-year change from 2021.

Housing

Housing expenditures surged by 7.4% in 2022, following a 5.6% increase in 2021. Both rented dwellings and owned dwellings saw significant rises, with increases of 6.5% and 8.4%, respectively. The most notable increase in housing-related spending within all major components was observed in “other lodging,” with a substantial 30.9% rise, primarily driven by a 38.6% increase in lodging costs for out-of-town trips.

Transportation

Transportation expenditures saw a substantial 12.2% increase in 2022, building on a 11.6% increase in 2021. This rise was primarily attributed to the noteworthy surge in public and other transportation spending, which grew by a significant 86.9%. There was also a 45.3% increase in expenses related to gasoline, other fuels, and motor oil. On the other hand, average expenditures for vehicle purchases experienced a 6.9% decline in 2022, following a 6.7% increase in 2021.

With consumers being called back to physical offices, it should come as no surprise that public transportation and private transportation costs both increased in 2022.

Food

Expenditure on food rose by 12.7% in 2022, compared to a 13.4% increase in 2021. This uptick was primarily fueled by a substantial 20.1% increase in spending on food away from home, alongside an 8.4% increase in spending on food at home. Notably, expenditures for food away from home in 2022 surpassed 2019 levels, marking the first time since the start of the COVID-19 pandemic that such a recovery occurred.

Personal Insurance and Pensions

Spending on personal insurance and pensions surged by 11.0% in 2022, following an 8.7% increase in 2021. This significant rise was powered by an 11.1% increase in contributions to pensions and Social Security. Spending on life and other personal insurance also saw a notable uptick, increasing by 9.7%.

Entertainment

Expenditures on entertainment took a downturn in 2022, decreasing by 3.1% after a substantial 22.7% increase in 2021. This decline was chiefly driven by a notable 24.5% decrease in spending on other entertainment supplies, equipment, and services, which is in stark contrast to the 60.6% increase witnessed in 2021. (as residual implications from the COVID-19 lockdown). Expenditures on toys, hobbies, and playground equipment also saw a reduction of 16.1% from 2021 to 2022.

Apparel and Services

Spending on apparel and services saw a 10.9% increase in 2022, following a substantial 22.3% increase in 2021. All major components within the category of apparel and services showed increases, with the most significant being an 18.8% rise in spending on footwear. This 10.9% growth brought spending in apparel and services back to levels exceeding those of pre-COVID-19 pandemic expenditure levels.

Personal Care

Expenditures on personal care products and services continued to rise, with a 12.3% increase in 2022, following the substantial 19.3% growth in 2021. This increase was driven by a 15.5% surge in spending on personal care products, rebounding strongly after a 1.0% decrease in 2021.

The Bottom Line

Consumer spending and the U.S. economy go hand in hand. When one increases, so does the other. What Americans buy and what percentage of their purchases are spent on non-essentials reflects their interests, habits, and vices. What America buys, therefore, is an economic self-portrait of the average American consumer.