Top Ten U.S. Spending Trends

Editor’s Note: The following guest article looks at Americans’ spending patterns over the past several years, and the trends they suggest for the future. Small businesses in retail and those that sell to consumers will find this trends interpretation especially useful.

By Cheryl Russell, New Strategist Publications

It is not easy to figure out what Americans do with their money. First, you have to ask enough people so that the answers are statistically representative. Second, those you ask must keep tedious track of their spending. Third, the data must be organized into meaningful categories or the details will overwhelm.

Fortunately, the Bureau of Labor Statistics does all of this with the Consumer Expenditure Survey, an annual data collection effort that reveals who spends how much on what. For more than ten years, New Strategist has been tracking CEX results to uncover trends in household spending. The latest findings reveal an aging population that responds eagerly to technological change, but also pinches pennies to cover the rising cost of a middle-class lifestyle. Here are the top ten trends, category by category.

APPAREL: Casual dressing

    The bad news just does not stop for the apparel industry. Average household spending on apparel plummeted 17 percent between 2000 and 2003, after adjusting for inflation. While some of the decline is due to falling prices, casual lifestyles are also to blame–making it less important to dress up no matter what the occasion. Dress-up clothes have been some of the biggest losers within the apparel category. Spending on men’s suits fell by a painful 28 percent between 2000 and 2003. Spending on women’s dresses was down by a heart-stopping 48 percent.


    The aging of the population is driving drinking trends. Although average household spending on alcoholic beverages fell 1.5 percent between 2000 and 2003, only beer took the hit, down 8 percent during those years. In contrast, spending on wine rose 4 percent. The best customers of wine are householders aged 45 to 64, an age group now expanding with the large baby-boom generation.


    Americans are spending a growing share of the entertainment dollar at home, with cable or satellite television service absorbing 21 percent of the entertainment budget–up from 17 percent in 2000. Spending on cable service rose 23 percent between 2000 and 2003, after adjusting for inflation. Spending on television sets was up an even larger 32 percent as households snapped up flat-screen, wide-screen, and HDTV-capable units. In contrast, average household spending on most out-of-home entertainment categories (movies, clubs, sports) fell during those years.

GROCERIES: No cooking

    Fresh prepared food ranks a lofty fourth among grocery items on which the average household spends the most, following chicken, milk, and cheese. Average household spending on fresh prepared food grew by an impressive 20 percent between 2000 and 2003, after adjusting for inflation. In contrast, overall spending on groceries fell 3 percent. Behind the increased spending on fresh prepared food is the growing need for convenience among busy, two-earner families. Other categories of prepared food also made gains, with spending on frozen prepared meals climbing 14 percent, on prepared desserts 12 percent, and on prepared salads 3 percent.

HEALTH CARE: Biting the bullet

    Out-of-pocket spending on health insurance climbed 19 percent between 2000 and 2003, after adjusting for inflation. In 2003, the $1,252 devoted to health insurance was the seventh-largest expense for the average household, up from ninth place a decade earlier. In 1993, the average household spent slightly less on health insurance than on electricity. In 2003, health insurance spending was 22 percent greater than spending on electricity.


    Despite the rise of homeownership, average household spending on home furnishings, supplies, and services fell between 2000 and 2003, after adjusting for inflation. One bright spot is the lawn and garden category. Spending on lawn and garden supplies–the fifth-largest household furnishings category after major appliances, laundry and cleaning supplies, decorative items for the home, and sofas–rose 14 percent during those years, after adjusting for inflation. Spending on lawn and garden equipment grew 11 percent.

INFORMATION: Cell phoning

    Spending on cell phone service more than doubled between 2000 and 2003, after adjusting for inflation. In 2000, the average household spent just 16 percent as much on cellular service as on landline service. By 2003, the figure had jumped to 51 percent. The youngest householders (under age 25), in fact, spend more on cell phone service than on landline service. The cell-to- landline proportion stands at 64 percent among householders aged 25 to 34 and declines with age to 23 percent among householders aged 65 or older.

PETS: Empty-nesting

    As baby boomers become empty-nesters, household spending on children is falling while spending on pets is rising. No household type spends more on pets than empty-nesters, which may explain why average household spending on pets rose 23 percent between 2000 and 2003, after adjusting for inflation. In contrast, spending on toys, games, hobbies, and tricycles fell 23 percent during those years. Spending on day care centers declined 15 percent, and spending on children’s clothes diminished 12 percent.

RESTAURANTS: Sitting down

    Of the $1,832 spent on eating out by the average household in 2003, fast-food restaurants captured a 47 percent share and full-service restaurants took an almost equal 46 percent share of the total (employer and school cafeterias, vending machines, and mobile vendors account for the remainder). But there are differences in how households allocate those eating-out dollars depending on the presence or absence of children at the table. Single parents and married couples with children under age 18 devote the smallest percentage of their dining-out dollar to full-service restaurants (29 to 38 percent). Couples without children at home, most of them empty-nesters, spend the largest share at full-service establishments (60 percent). Make your reservations now: as millions of boomers become empty-nesters, full-service restaurants will be booked.

TRANSPORTATION: Shifting gears

    The share of transportation spending devoted to new trucks (a category that includes sport utility vehicles and minivans) climbed from 9 to 14 percent between 2000 and 2003 as the average household boosted its spending on this item by an enormous 51 percent, after adjusting for inflation. In 2003, the average household spent more on new trucks than on new cars, used cars, or used trucks–a reversal of the pattern in 2000. Reasons for the reversal include falling prices for used vehicles because of a market glut and growing consumer preferences for trucks over cars. With gasoline prices rising to record levels and likely to stay that way, expect more change in vehicle-purchasing patterns.

* * * * *

About the Author: Cheryl Russell is editorial director of New Strategist Publications ( For more details on spending, see the new tenth edition of Household Spending: Who Spends How Much.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.