DEC 22, 2016
Consumers are the foundation of the U.S. economy, and how they choose to spend their money is a telling indicator of the overall American economic story.
The above chart from HowMuch.net, a cost information site, plots data from the Bureau of Labor Statistics (BLS) for 12 different consumer categories over a period of nearly 75 years to show the changing way in which Americans spend their money.
The data reflects median spending, and is adjusted for inflation.
BACK IN THE DAY…
One of the most interesting things about this chart is the data from 1941. What did Americans spend their money on before entering WWII, and how does that contrast with today?
Interestingly, in 1941, more money was spent on food than anything else. That year, the cost of putting food on the table averaged $8,311, coinciding with a time when nearly 15% of the workforce was working in agriculture. Today, farming is obviously much more technologically advanced, and food is also grown cheaply in other countries for consumption in America.
Food is now only the third-most important spending category for Americans at $6,759 per year, and only 1.6% of Americans now work agriculture, according to the World Bank.
Housing has also changed dramatically over time. While it has always been a key component of spending, shelter was actually cheaper ($7,537 per year) than putting food on the table in 1941. Since then, rents and house prices have risen substantially, and Americans now spend $17,798 per year on housing. This makes it by far the largest expenditure, on average, for each person.
TRENDING UP, TRENDING DOWN
Over the years, cost reductions can be seen the most in both clothing and food categories, which have benefited from new technologies and cheap labor in other countries.
Meanwhile, significant increases in spending can be found in healthcare, education, and transportation categories.
Healthcare spending in the U.S. is a global outlier (and not in a good way), and we previously noted that textbook and tuition costs have increased 207% and 197% respectively since 1996.
Lastly, the trend for money spent on transportation appears to reflect the cost of oil, which hit its highest points in the early 1980s and late 2000s. The most recent year of data from 2014 shows a notable decrease in transportation costs, which likely reflects the collapse in oil prices that occurred in mid-2014.