Shopping Stateside: How the US Consumer Spends

09 February 2005

American consumers' priorities have changed over the passing decades, with increases in real income fueling higher levels of consumption. Household spending has increased tenfold since 1950.

But this growth is less impressive when adjusted for increased prices. After weighting for inflation, spending per household rose from $29,000 in 1950 to $37,000 in 1972 - and to $40,817 in 2003.

That's the kernel of the latest Consumer Spending Survey, published Monday by the US Bureau of Labor Statistics.

In 2003 over half the typical family budget was spent on the house (33¢ of every dollar) and on the car (19¢). Thirteen cents went on food, six cents on medical bills, five cents on entertainment, and an abstemious one cent on alcohol.

These days expenditure on food has more than halved. In 1950 food outlay accounted for 32 cents in every dollar; by 2003 it had slumped to thirteen cents.

Likewise increased incomes have led to a far higher level of eating out or take-away. In combination, these accounted for 21% of food expenditure in 1960; today they represent 41%.

The share of food budget devoted to dining out increases with wealth. In 2003 the poorest fifth of families spent one-third of food budgets on out-of-home meals. The top fifth spent marginally more on dining out ($4,535) than eating at home ($4,503).

If every man's home is his castle, Americans today boast more and larger domestic citadels. The survey cites data from the Census Bureau and the National Association of Home Builders ...

  • 69% of families own homes today, versus 63% in 1965.

  • The average new house today is 2,300 square feet, as opposed to 1,500 square feet in the mid-60s, and below 1,000 square feet in 1950.

  • Bigger homes need more furniture. Housing and allied expenditure was 33 cents in every dollar of consumer spending in 2003, up from 26 cents in 1950.
On the transport front, the survey quotes census data alongside sales figures from Automotive News. In 2003, transport costs sliced 19 cents out of every consumer dollar, compared with 15 cents in 1960.

This is explained by a surge in automobile ownership and more costly cars - in 1960, a basic Ford sedan cost $2,257 ($14,000 by 2003 values), whereas the average new vehicle cost around $25,000 in 2003.

With regard to clothing and footwear, Americans today spend a similar proportion of their income - four to five percent - as they did back in 1950. And this figure is constant regardless of household income.

Consumer Price Index data indicates that inflation has been held at bay by the rise in cheap foreign imports and the advent of discount retailers like Wal-Mart. Clothing costing $100 in 1984 had risen to $116 in 1993. But the 1993 price remains unaltered ten years on.

Leisure is the final indicator of change in the American Way of Life. In total, the share of budget dedicated to leisure and entertainment has changed little, still around the 1950 level of 5%.

Priorities, however, have changed significantly. Dollar outlay on consumer electronics has escalated dramatically, while spend on newspapers, magazines and books has nosedived. The average household devoted only 0.3% of spending ($127) for reading materials in 2003, down from 1% ($317 inflation-adjusted) in 1960.

And although the better educated, richer segments of American society spend more on books and print media than do the poor, it transpires that in 2003 households in every income quintile invested the same average (0.3% of budget) on reading.

Three related datasets in Excel format can be downloaded by visiting the AdAge website.

Data sourced from AdAge (USA); additional content by WARC staff