No. 5 …What We Spend In A Month

Has the much heralded age of austerity really come? As you can see from our snapshot of the changes in monthly household spending over the past four years, it’s a mixed picture. Following the financial crisis and recession, consumer spending dropped in 2009 for the first time in 71 years, but we didn’t close our wallets completely. Each month, the average adult American buys $3,710 worth of goods and services (which includes direct purchases as well as such expenses as employer-funded health care plans bought on our behalf), according to the Bureau of Economic Analysis. Adjusted for inflation, that’s down just 2%, from $3,784 four years ago.

Instead of cutting back wholesale, we have traded down. Americans are spending more on games and hobbies, bikes and outdoor equipment, fostering homemade fun, than we did before the downturn; we are laying out less for speedboats, foreign cars and six-burner professional stoves. Foreign travel is down, but splurges on nights at U.S. hotels are up. We are spending less on sporting events and amusement parks but more at the movies–and on TV viewing.

Is this a permanent shift? It has to be. The supply of credit that fueled years of consumption disappeared during the financial crisis. Aging baby boomers will have to devote more of their cash to health care services, which already absorb 16% of our budgets. And real estate is unlikely to produce the boost in wealth it once did.

We haven’t become as thrifty as some economists might have expected. But what we define as splurges and necessities has changed. Expenditures on cell phones, cable television and Internet service, for instance, have not been dented one bit by the recession. “Connectivity has joined food, shelter and sex as a necessity,” says consumer-behavior expert Paco Underhill. In a pinched era, we need all the community we can get.

[The following text appears within a chart. Please see hardcopy for actual chart.]

Water 84 C

Air $19

Museums/libraries $2

Public $31

Sporting events $8

Movie theaters $4

Sporting $8

Lotteries $8

Pets $9

Amusement parks $16

Cable TV $29

5.4 MIN. Increase in time per day Americans spent watching TV in 2010 over 2007

School lunches $3

Housing at schools $9

Hotels $25

Alcohol purchased with meals $26

Restaurant meals $161

Securities commissions $13

Pension funds $14

Financial service fees $31

Investment advice $33

Insurance $94

Laundry/dry cleaning $3

Postal/delivery service $3

Day care/nursery schools $4

Lobor-organization dues $4

Moving/storage $5

1 IN 4 Households that had only wireless phones in 2010, an eightfold rise since 2004

Landline telephone $5

Funeral/burial services $7

Accounting/business services $10

Internet access $19

Personal-care services $34

Legal services $34

Cell-phone services $36

Foreign travel $43

13.9 MILLION Passports issued in fiscal year 2010, 24% fewer than in 2007

Higher education $57

Medical laboratories $12

Home healthcare $30

Dental services $38

Nursing homes $51

Physician services $138

Hospitals $277

Natural gas $16

Electricity $60

Housing $557

Outdoor equipment $2

Tools $6

Dishes $6

Appliances $14

Furniture $29

Bicycles $2

18% Increase in workers commuting mainly by bicycle or motorcycle, from 2006 to 2009

Musical instruments $2

Pleasure boats $3

TVS $13

Computers $17

Children’s clothing $5

Shoes $21

Men’s clothing $35

Women’s clothing $59

Tires $8

Accessories/parts $10

Used autos $18

New autos $27

Fuel oil $8

Gas/other motor fuel $139

Colors signify change in spending, 2007–11

-10%

-5%

No change

5%

10%

Seafood $5

Wine $9

Fresh fruit $10

7,175 Farmers’ markets operating in the U.S. in 2011, a 64% increase since 2006

Beef/veal $14

Sugar/sweets $15

Poultry $17

Dollar figures represent average 2011 monthly spending per person

Film/photo supplies 82 C

Watches $3

Jewelry $21

Games, toys and hobbies $22

Tobacco $34

Personal care $35

Household cleaning supplies $42

Pharmaceuticals $119

Transportation $106

Down 16%

Recreation $137

Down 5%

Lodging and food services $234

Down 1%

Financial services/insurance $280

Down 11%

Other services $427

Down 2%

Includes nonprofits serving households

Health Care $601

Up 5%

Housing and utilities $665

Down 1%

Furnishings $87

Down 4%

Recreation $119

Up 25%

Clothing $121

Up 1%

Motor vehicles $126

Down 18%

Gasoline and energy $151

Down 12%

Food $281

Down 1%

Off-premises consumption

Other goods $375

Up 2%

GOODS $1,260 a month

SERVICES $2,450 a month

2011 Q2 amounts are based on civilian noninstitutional population over age 16 and include spending on behalf of consumers. Change is based on inflation-adjusted values from Q2 2007.

Sources: Bureau of Economic Analysis; Department of Agriculture; Department of State; Centers for Disease Control and Prevention; Bureau of Transportation Statistics