How much have our spending habits changed in the past 35 years? I decided to look back to 1970's and compare to this decade. I used consumer spending report for 1972-1973 and then compared that to consumer spending in 2005.
First of all lets look at the numbers and how much we spent in the '70's. Total average household income in the period was $11,419. In the table below I list the spending in major categories and the % of income that category represents.
|Apparel & service||$ 647||5.7%|
|Personal care & serv||$ 165||1.4%|
|Read and educat||$ 153||1.3%|
|Cash contribution||$ 508||4.4%|
|Personal insur, pens||$ 734||6.4%|
Now lets look at the spending in the same categories for 2005. The household income was $58,712. The table for 2005 is below:
|Apparel & service||$ 1,886||3.2%|
|Personal care & serv||$ 541||0.9%|
|Read and educat||$ 1,066||1.8%|
|Cash contribution||$ 1,663||2.8%|
|Personal insur, pens||$ 5,204||8.9%|
Graphically we can compare the spending for the 1970's to 2005 by looking at how the pie is split up:
You'll likely notice that some of the % values have changed a fair amount.
Major spending categories that have decreased from the 1970's:
|Apparel & service||-2.5%|
|Personal care & serv||-0.5%|
One major reason for decreases in many of these categories is that the average household had 3 people in the 70's and only 2.5 people in 2005. So while in the 70's you were buying food, clothing, entertainment,etc for 3 people in the 2000's you would only be buying those things for 2.5 people on average. Also, inflation has been low for many of these items. Food and apparel have not seen high inflation since the 1970's. Looking closer at food prices, they have not increased as fast as wages. If you look at the old statistical abstract and dig into the 1970's they have specific food prices listed, you can compare to the Food prices for 2006.
Here are some basic food prices for 1970 and 2006 and the % increase:
|hamburger 1lb||$ 0.66||$ 2.26||242%|
|flour 1lb||$ 0.12||$ 0.32||171%|
|eggs 1dz||$ 0.61||$ 1.54||151%|
|milk 1 gallon||$ 1.32||$ 3.00||127%|
|potatoes 1lb||$ 0.09||$ 0.52||478%|
|bananas 1lb||$ 0.16||$ 0.50||214%|
|tomatoes 1lb||$ 0.42||$ 1.64||290%|
|coffee 1lb||$ 0.91||$ 3.11||242%|
So while wages increased +400% in the time period, most of these food prices increased +150-300%.
Spending Categories that have increased from the 1970's to today:
|Personal insur, pens||2.4%|
|Read and educat||0.5%|
Housing costs have increased as a direct reflection of housing expenses. Keep in mind though that size of the average home has increased over the decades. Personal insurance and pensions have gone up due to the decline in business pension funds. More people put money into 401k's and IRAs now compared to in the 70's when most employers had pension funds as part of compensation.
Transportation as a % of income spending has not increased significant however the average household now has 2 cars whereas in the 70's there were only 1.25 cars per home. So while we're spending about the same on transportation as a % we're driving more cars.
Interestingly we have not had a significant change in spending on healthcare as a % of income per household. This may be a reflection of fewer people in households and the fact that a larger % of Americans are uninsured.
Spending on vices has decreased. IN the 70's we spent 2.1% of our income on alcohol and tobacco but by 2005 that had decreased to 1.2%. Part of that is decrease in the amount of smokers in the country. In the 60's and 70's about 40% of the adult population smoked but by 2006 the rate dropped to 20.6%. Also it appears that alcohol consumption has dropped about 10% from 1970 to 2006.
Census Statistical Abstracts 1951-1994