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Consumer Spending: An Overview
Consumer spending is a vital component of the American economy, accounting for 70% of its GDP. It’s fascinating to see that in 2022, the average annual expenditure for consumers in the U.S. surged by 9%, reaching a staggering $72,967, according to the U.S. Bureau of Labor Statistics. As if that weren’t enough, during the same period, the Consumer Price Index (CPI) for all urban consumers saw an 8% rise, while average income before taxes increased by 7.5%.
Key Takeaways
– Consumer spending comprises both necessities like food and housing, and discretionary purchases.
– It constitutes more than $13 trillion and represents around 70% of the American GDP.
– In 2022, the average expenditure per American rose by 9% compared to 2021.
Spending Trends in Specific Categories
There are several major categories of consumer spending, analysed by the Bureau of Labor Statistics (BLS). The statistics we discuss here reflect the changes from 2021 to 2022. Let’s explore these categories to understand where the money is flowing.
Housing
In 2022, housing expenditures increased by 7.4%, following a 5.6% rise in the previous year. Remarkably, both rented and owned dwellings experienced increases of 6.5% and 8.4%, respectively. “Other lodging” costs surged by 30.9%, largely due to a 38.6% hike in lodging for out-of-town trips. This demonstrates a renewed enthusiasm for travel post-pandemic.
Transportation
Transportation expenses also saw significant growth. In 2022, they expanded by 12.2%, building upon an 11.6% increase in 2021. The spike was predominantly due to a remarkable 86.9% rise in public and other transport spending. Interestingly, there’s been a 45.3% increase in gasoline and motor oil expenses as well. However, vehicle purchases decreased by 6.9%.
Food
Now, turning to our stomachs, expenditure on food surged by 12.7% in 2022. This came after a 13.4% climb the previous year. In this respect, a 20.1% increase was noted for dining away from home, and an 8.4% boost for home-cooked food. For the first time since the pandemic, spending on dining out sloshed back to pre-2019 levels.
Apparel and Services
Clothes and services spending grew by 10.9% in 2022, following a substantial 22.3% jump previously. Interestingly, footwear spending saw the highest rise, with an impressive 18.8% boost. This level of growth brought spending back beyond pre-COVID-19 levels—an indication of renewed style vigour.
Personal Insurance and Pensions
Regarding personal insurance and pensions, there was an 11% increase in 2022. This surge topped an earlier 8.7% hike, propelled mainly by pensions and Social Security contributions. Moreover, spending on life and other personal insurance saw a noteworthy uplift, increasing by 9.7%.
Entertainment
When it comes to entertainment, expenditures took a 3.1% dip in 2022. This contrasts sharply with a significant 22.7% rise in 2021. The most notable decline was in the “other entertainment” category, down by 24.5%, offsetting the mammoth 60.6% gain from the year before.
The Bottom Line
The symbiotic relationship between consumer spending and the American economy is undeniable. As one grows, so typically does the other. Observing what Americans purchase—and how much of it’s spent on non-essentials—provides an insightful glimpse into their culture and priorities. In essence, it’s an economic self-portrait of the average citizen. If you’re keen to learn more about consumer habits, consider exploring this full delve into behavioral modeling of spending.
In sum, each spending shift echoes broader changes, whether they’re economic recuperations or shifts in personal preferences. The numbers tell a story about lifestyles and choices, shaping an intriguing picture of the American spirit.