Considered by many economists to be the most important short-run determinant of economic performance, consumer spending is the driving force behind the U.S. economy. It encompasses all individual and household purchases of services and goods. In the ideal economy, it should be equal to aggregate economic output.
When analyzing consumer spending statistics, it’s important to understand that there are five different determinants of consumer spending that influence the economy. The biggest and most important of these are disposable income and household debt. Next come interest rates, consumer confidence, and credit supply. Combined, these five factors can dictate how a country’s entire economy performs.
From inflation to deflation, consumer spending reflects the state of the economy in the U.S.A. It holds the economy back when consumer trust is low and pushes it forward during periods of prosperity. Ever since the official end of the Great Recession in 2012, consumer spending data has indicated that the economy is recovering. But what do the numbers say in 2019?
Top Consumer Spending Figures – Editor’s Choice
- Consumer spending makes up about 70% of economic activity in the United States.
- Consumer spending increased 4.8% in 2017 compared to the year before.
- The average American household spends 33% of its income on housing.
- The median household income after taxes is $61,372.
- On average, consumers in the bottom 60% of earners spend more than they earn.
US Consumer Spending Statistics
1. U.S. consumer spending on home entertainment reached $23.28 billion in 2018.
After hitting a 12-year low in 2014, the amount U.S. consumers spend on home entertainment has risen steadily with each subsequent year. This increase can be attributed primarily to the rise of streaming services like Netflix, Hulu, and Amazon Prime. In 2018 alone, this increase amounted to almost $2.5 billion, or 11.5% compared to the year before.
2. The average American household spends 33% of its income on housing.
United States consumer spending statistics show that money spent on housing still represents the biggest expense for most consumers. In fact, housing expenses rose to an average of $19,884 annually in the latest Bureau of Labor Statistics data from 2017. Transport comes in second place, but represents only 15.8% of yearly household expenditure, followed by food at 12.6%. The same government data indicates that over a two-year period, housing expenditure rose by an average of almost $2,000.
Share of U.S. Household Expenditures by Category
3. The median household income after taxes is $61,372.
The latest consumer discretionary spending statistics from 2017 show that the median household income increased by 1.8% compared to the year before, when it was $60,309. This represented a third consecutive yearly increase since 2014, indicating that the U.S. economy was recovering from the Great Recession.
4. U.S. consumers spend at least $18,000 per year on non-essential items.
Research into consumer spending indicates that the average American consumer could spend over $1 million on non-essential purchases during his or her lifetime. This means U.S. consumers spend around $1,500 per month on things like eating in restaurants, drinking with friends, rideshare trips, and subscription boxes.
5. 70% of U.S. consumers believe they could be smarter with their money.
Consumer spending statistics from 2019 like this one show that U.S. citizens at least understand that they aren’t being wise with their spending. However, about 24% of consumers also concede that they don’t have a budget. This shows that there is a long way to go from acknowledging the issue to actually resolving it.
6. On average, Americans make five impulse purchases every month.
A survey on consumer spending trends found that these purchases amount to $109 per month. Despite this, 58% of consumers feel like they don’t have enough money to afford more important things, or indeed to put money aside in the form of long-term savings.
7. The average consumer in the bottom 60% of earners spends more than he or she earns.
The same research on consumer spending by income level from the Bureau of Labor Statistics shows that serious over-spending is a problem for consumers younger than 25 and older than 65. In general, American citizens tend to spend more than they earn, which is why managing your funds properly is more important than ever.
8. Consumer spending makes up about 70% of economic activity in the United States.
Government data on consumer spending shows without doubt that it is the biggest driving factor behind the U.S. economy, especially during economic recoveries like that of the past decade. The Great Recession of 2008 put a lot of pressure on U.S. citizens, but the increase in consumer spending over the past couple of years indicates that the economy has fully recovered.
9. Consumer spending in the U.S.A. is up 2.5% from 2018.
The latest statistics on US consumer spending from 2019 show the upward trend in motion since 2014 is likely to continue throughout this year. In the first quarter of 2019 alone, spending reached $14.24 trillion, with figures showing a huge trend toward online shopping. This has come at the expense of holiday shopping and Black Friday sales, both of which failed to match previous standards.
10. Healthcare expenditure has increased by 67% since 2006.
The newest consumer spending data shows that healthcare costs – along with pensions and entertainment – have increased by more than 20% over this period. While these still aren’t among the top fields for consumer expenditure, their yearly increase rates are unmatched by any others on the list. On the other hand, U.S. citizens are spending less and less of their income on apparel, indicating a shift towards experiences instead of material possessions.
Our Summary
When considering all the available US consumption data from the past couple of years, we can come to a few key conclusions. The first is that there’s an obvious correlation between consumer expenditure and GDP growth. Secondly, it’s clear that Americans spend a lot of money on non-essential purchases. And thirdly, we can see that household income is rising, although perhaps not at the rate it needs to.
The importance of consumer spending for the U.S. economy has long been debated, with some people arguing that savings and business investment are more crucial for growth. At a time of crisis, however, there’s no doubt that personal consumption expenditures help economies get back on their feet, and the most recent global financial crisis has shown just that. Indeed, the current rise in consumer spending indicates that the U.S. economy has fully recovered.
Americans are spending more of their income than ever on impulse purchases and luxuries, including restaurant dinners, drinks with friends, and entertainment services. These things help the economy in the short term, but a more moderate approach with an emphasis on savings could potentially lessen the blow of future financial crises.
We hope our consumer spending statistics help you make the right decisions for your future.
