The American Consumer - Contemporary Consumer Spending

Table 7.1 shows a breakdown of what the average American spent on various items in 2000, 2001, and 2002.

TABLE 7.1

Average annual consumer expenditures, 2000–02
				Percent change
Item	2000	2001	2002	2000–01	2001–02
*Income values are derived from "complete income reporters" only.
SOURCE: "Table A. Average Annual Expenditures of All Consumer Units and Percent Changes, Consumer Expenditure Survey, 2000–2002," in Consumer Expenditures in 2002, U.S. Department of Labor, Bureau of Labor Statistics, February 2004, http://www.bls.gov/cex/csxann02.pdf (accessed January 4, 2005)
Number of consumer units (in thousands)	109,367	110,339	112,108
Income before taxes*	$44,649	$47,507	$49,430
Averages:
Age of reference person	48.2	48.1	48.1
Number of persons in consumer unit	2.5	2.5	2.5
Number of earners	1.4	1.4	1.4
Number of vehicles	1.9	1.9	2.0
Percent homeowner	66	66	66
Average annual expenditures	$38,045	$39,518	$40,677	3.9	2.9
Food	5,158	5,321	5,375	3.2	1.0
Food at home	3,021	3,086	3,099	2.2	.4
Cereals and bakery products	453	452	450	−.2	−.4
Meats, poultry, fish, and eggs	795	828	798	4.2	−3.6
Dairy products	325	332	328	2.2	−1.2
Fruits and vegetables	521	522	552	.2	5.7
Other food at home	927	952	970	2.7	1.9
Food away from home	2,137	2,235	2,276	4.6	1.8
Alcoholic beverages	372	349	376	−6.2	7.7
Housing	12,319	13,011	13,283	5.6	2.1
Shelter	7,114	7,602	7,829	6.9	3.0
Utilities, fuels, and public services	2,489	2,767	2,684	11.2	−3.0
Household operations	684	676	706	−1.2	4.4
Housekeeping supplies	482	509	545	5.6	7.1
Housefurnishings and equipment	1,549	1,458	1,518	−5.9	4.1
Apparel and services	1,856	1,743	1,749	−6.1	.3
Transportation	7,417	7,633	7,759	2.9	1.7
Vehicle purchases (net outlay)	3,418	3,579	3,665	4.7	2.4
Gasoline and motor oil	1,291	1,279	1,235	−.9	−3.4
Other vehicle expenses	2,281	2,375	2,471	4.1	4.0
Public transportation	427	400	389	−6.3	−2.7
Health care	2,066	2,182	2,350	5.6	7.7
Entertainment	1,863	1,953	2,079	4.8	6.5
Personal care products and services	564	485	526	−14.0	8.5
Reading	146	141	139	−3.4	−1.4
Education	632	648	752	2.5	16.0
Tobacco products and supplies	319	308	320	−3.4	3.9
Miscellaneous	776	750	792	−3.4	5.6
Cash contributions	1,192	1,258	1,277	5.5	1.5
Personal insurance and pensions	3,365	3,737	3,899	11.1	4.3
Life and other personal insurance	399	410	406	2.8	−1.0
Pensions and Social Security	2,966	3,326	3,493	12.1	5.0

In 2002 the average pre-tax household income was $49,430, and average annual household spending totaled $40,677, up 2.9% from 2001. In 2002 Americans spent an average of $13,283 on housing, $7,559 on transportation, and $5,375 on food. The percentage of total consumer expenditures on housing-related costs increased from 24.8% of annual income in 1950 to 32.6% in 1999—households in 1950 spent just 10.2% of their incomes on physical shelter alone (mortgage or rent payments), while in 1999 monthly housing payments accounted for 19% of annual incomes. Spending on housing-related utilities, fuels, and public services went up from 3.8% of annual household incomes in 1950 to 6.4% in 1999, hitting a high of 7.4% in 1980. In the category of home furnishings and equipment (including such items as dishwashers, washers and dryers, and cooking appliances), however, spending actually decreased, from 6.5% of annual income in 1950 to 4.1% in 1999. According to a U.S. Census Bureau joint news release with the U.S. Department of Housing and Urban Development (http://www.census.gov/const/newressales_0502, March 24, 2005), the average sales price of single-family houses in February 2005 was $288,400, up from an average price of $10,050 in 1950.

Spending on Food

One category that has become increasingly affordable is food. In the early years of the twentieth century the average American household spent about 43% of its annual income on food. In 1950 the percentage fell to 27%, and by 1999 Americans spent just 13.6% of their incomes on food. On average, Americans spend 5.7% of their income each year on dining out. In 2004 there were about 900,000 restaurants in America, which were projected to bring in $476 billion in sales in 2005, according to the National Restaurant Association (http://www.restaurant.org/research). Data from the same group's Industry Research report illustrate the dramatic increase in restaurant patronage by American consumers from 1970 to 2004. The average American ate away from home an average of 4.2 meals per week in 2004.

The Youth Market

Notable is the spending power of one of the largest and fastest-growing consumer groups in U.S. history: the youth market. This group comprises those from about ages three to nineteen and is divided into the three distinct categories: kids (generally accepted as ages three to twelve, but this group can include younger toddlers and even infants); tweens (ages eight to twelve or fourteen); and teens (ages twelve to nineteen).

The youth market is larger and has more money readily available than ever before. In 2004 there were about 52 million Americans under age twelve, 23 million ages eight to fourteen, and 32 million ages twelve to nineteen. Marketing companies estimate that by 2007 those in the tween category will have about $43.5 billion in disposable income (the amount of money left over after all fixed bills have been paid) to spend annually, with each twelve- to fourteen-year-old able to spend about $1,972 a year ("Tween and Teen Buying Power," http://www.csnews.com/csn/cat_management/article_display.jsp?vnu_content_id=1000835410, March 26, 2005).

According to economist Juliet B. Schor (Born to Buy: The Commercialized Child and the New Consumer Culture, New York: Scribner, 2004), annual purchases made by children ages four to twelve rose 400% between 1989 (when they spent $6.1 billion) and 2002 (when they spent $30 billion), and in 2002 those ages twelve to nineteen spent $170 billion. Additionally, in 2004 child consumers ages four to twelve directly influenced $330 billion in adult spending and indirectly influenced another $340 billion. Internationally, tweens influenced more than $1 trillion in adult spending. In 2004 advertisers spent about $15 billion on marketing to children, versus $100 million in 1983, with advertisements aimed at children and young people appearing not only on television and in magazines but online, in school bathrooms and lunchrooms, and on Channel One, the cable network designed for in-school use.

Candy and junk food are the number-one items kids buy, followed by toys. Often, especially in the cases of younger children, they are not actually laying out the money for these items themselves. Children are considered by the marketing industry to be "conduits" into the American home. Mothers are commonly referred to as "gatekeepers," representing their ability to keep advertisers out of children's awareness, and thus the advertisers' need to get past parents to appeal directly to children. Even with parents playing the gatekeeper role, however, "The typical American child is now immersed in the consumer marketplace to a degree that dwarfs all historical experience. At age one, she's watching Teletubbies and eating the food of its 'promo partners' Burger King and McDonald's. Kids can recognize logos by eighteen months, and before reaching their second birthday, they're asking for products by brand name. … Upon arrival at the schoolhouse steps, the typical first grader can evoke 200 brands" (Schor, 2004).

Experts (including Schor), parents, and even pediatricians are increasingly critical of the marketing industry's focus on children as a target audience for consumerism. A spate of books and articles were published in the early twenty-first century that focused on the darker side of mass consumerism for children and young people, including No Logo: No Space, No Choice, No Jobs by Naomi Klein (2002), Branded: The Buying and Selling of Teenagers by Alissa Quart (2003), and Consuming Kids: The Hostile Takeover of Childhood by Susan Linn (2004), in addition to Schor's book. These critics argue that the commercialization of childhood plays on children's insecurities and undeveloped reasoning abilities to produce young people who are easily manipulated, overly concerned with superficial matters, and who may engage in unhealthy or dangerous behavior, such as eating disorders, smoking, and drinking, in order to fit in. Nonprofit organizations such as Stop the Commercialization of Children (located in Boston) and the Citizens' Campaign for Commercial-Free Schools (in Seattle) have formed to raise awareness of the issue, and the American Academy of Pediatrics has come out against early consumerism. Partly to address the criticism and partly because of consumer lawsuits blaming fast-food restaurants for youth obesity, the Coca-Cola Company announced in July 2003 that it would no longer market its products to children (Sarah Theodore, "Sign of the Times: Coca-Cola Ends Marketing to Children," Beverage Industry, August 2003).