Consumer spending always represents about 70% of the US economy. What Americans are buying with all this consumption falls into two main categories: First, there is non-discretionary spending on necessities like food, medicine, housing, and clothing. Secondly, there is Discretionary spendingWhich includes all non-essential goods and services. The data below provides a reasonably accurate picture of the country’s leisure and pastimes, its interests, hobbies, indulgences and vices.
Key takeaways
- Consumer spending refers to all final consumer goods and services for current personal and household use, and includes necessities and discretionary purchases.
- Consumer spending in total amounts to more than $13 trillion, which constitutes about 70% of the US gross domestic product.
- In 2022, average spending per American is $72,967.
- In 2022, average spending per American increased 9% year over year compared to 2021.
Consumer spending: an overview
In 2022, average annual expenses for all consumer units in the United States rose 9%, to $72,967, according to the US Bureau of Labor Statistics. During the same period, Consumer Price Index (CPI) for all urban consumers by 8% and average income before taxes by 7.5%.
The distribution of these expenses reveals that housing was the largest item, accounting for 33.3%, followed by transportation at 16.8%. A number of combined categories added up to less than 5% overall including miscellaneous personal care products and services, alcoholic beverages, tobacco products, and smoking and reading supplies.
As you read about the year-over-year changes, think about how fragile and unique the global economy was in 2021. The year-over-year changes from 2021 to 2022 marked a unique transition to the post-pandemic world, often yielding significant outcomes different from “normal” economic conditions.
Consumer spending in specific categories
Below are the major spending categories for which the Bureau of Labor Statistics compiles and tracks statistics. Note that as of October 2023, the most recent annual data from the Bureau of Labor Statistics covers calendar year 2022. The statistics below cover not only spending for that year, but the annual change starting in 2021.
Housing
Housing expenses rose 7.4% in 2022, after a 5.6% increase in 2021. Owned housing They witnessed significant increases of 6.5% and 8.4%, respectively. The most pronounced increase in housing-related spending was observed within all major components in “other housing,” with a significant rise of 30.9%, driven primarily by a 38.6% increase in housing costs for out-of-town trips.
communications
Transportation expenditures saw a significant increase of 12.2% in 2022, following an 11.6% increase in 2021. This increase was primarily due to a notable rise in spending on public transportation and other modes of transportation, which grew by a significant 86.9%. Expenditures related to gasoline, other fuels, and motor oils also increased by 45.3%. On the other hand, average spending on vehicle purchases saw a 6.9% decline in 2022, after a 6.7% increase in 2021.
As consumers are called back to their physical offices, it should come as no surprise that public and private transportation costs will rise in 2022.
food
Food spending rose 12.7% in 2022, compared to a 13.4% increase in 2021. This rise was primarily driven by a significant 20.1% increase in food spending away from home, coupled with an 8.4% increase in food spending At home. Notably, spending on dining out from home in 2022 exceeded 2019 levels, marking the first time since the start of the COVID-19 pandemic that such a recovery has occurred.
Personal insurance and pensions
Spending on Personal insurance Pensions rose 11.0% in 2022, after an 8.7% increase in 2021. This significant rise was driven by an 11.1% increase in contributions to pensions and Social Security. Spending on life and other personal insurance also saw a significant increase of 9.7%.
entertainment
Expenditures on entertainment eased in 2022, falling 3.1% after a significant 22.7% increase in 2021. This decline was primarily driven by a notable 24.5% decline in spending on other entertainment supplies, equipment and services, which stands in stark contrast to the increase of 60.6% witnessed in 2021 (as residual effects from the closure caused by the Corona virus). Expenditures on toys, hobbies and playground equipment also saw a 16.1% decline from 2021 to 2022.
Clothes and services
Spending on apparel and services saw an increase of 10.9% in 2022, after a significant increase of 22.3% in 2021. All major components within the apparel and services category showed increases, the most significant of which was an 18.8% increase in spending on footwear. This 10.9% growth brought spending on apparel and services back to levels exceeding pre-COVID-19 spending levels.
Personal care
Expenditures on personal care products and services continued to rise, with a 12.3% increase in 2022, after significant 19.3% growth in 2021. This increase was driven by a 15.5% rise in spending on personal care products, which rebounded strongly after 19.3% growth. 1.0%. decline in 2021.
Bottom line
Consumer spending and the US economy go hand in hand. When one increases, so does the other. What Americans buy and what proportion of their purchases they spend on unnecessary items reflects their interests, habits, and vices. What America buysIt is thus an economic self-portrait for the average American consumer.