Consumer spending accounts for about 70% of the U.S. economy. What Americans buy is divided into two major categories. First, there's spending on necessities such as food, housing and clothing. Second, there's discretionary spending which includes the buying of non-essential goods and services.
Total U.S. consumer spending increased 0.8% in February 2012, according to U.S. Commerce Department data, indicating a modest advance in the slow-moving economic recovery.
The recent increase in consumer spending may be attributed in part to higher gas prices, but it also suggests increased discretionary spending and an upsurge in consumer confidence, as more jobs were created early in the year and consumers took on more debt. By the end of April, however, the economy seemed to weaken again.
America's buying habits have been well documented. In 2009, the latest year for which comprehensive data is available from the U.S. Bureau of Labor Statistics, Americans spent $1.13 trillion on discretionary purchases.
The data provides a reasonably accurate picture of the nation's amusements and entertainment, it's interests, hobbies, indulgences and vices. Below, is a list of the top ten discretionary purchases of goods and services by category. The percentages cited below are based on an average American household income of $63,000.
Apparel Products and Services
Dry cleaning, storage of clothing, rental of clothing, jewelry and watch repair are included in this category. Total Purchases: 0.5%.
Despite the well-known health hazards of smoking and chewing tobacco, Americans continue to use tobacco products. Total Purchases: 0.8%.
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Entertainment Equipment and Services
This is a broad category that includes sports equipment, photographic equipment and supplies, hunting and fishing equipment, bikes, boats, balls and other sports equipment. Total Purchases: 0.8%.
Every variety of alcoholic beverage, including straight and mixed drinks, beer and wine are included in this category. Most of these beverages are consumed at home, according to the data. Total Purchases: 0.9%.
Fees and Admissions
Americans love movies, musical concerts and sports events, and spent more in this category than they spent on goods and services for personal care. Total Purchases: 1.3%.
The more income per household, the more is spent on hotels, motels, vacation homes and lodging for weekend getaways, or for longer vacations. Total Purchases: 1.4%.
Hobbies, Toys, Pets and Playground Equipment
This is a catch-all category, with the majority of the money spent going for pets - their food and veterinary care. Total Purchases: 1.4%.
Television, Radio and Sound Equipment
Also included in this category are video games (hardware and software), cable TV connections, and DVD and CD players. Total Purchases: 2%.
Americans are a generous people, and this virtue - or extravagance - is illustrated in the amount they spend annually on gifts. Total Purchases: 2.2%.
Food Not Consumed at Home
Eating out, including fast food and traditional restaurants, and leisurely venues, account for a larger percentage of meals not consumed at home. This category also includes food obtained from vending machines, mobile food vendors and delivery services.
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Some essential purchases for the same period included the following:
Total Purchases (%)
Doctors and Dentists
Hospitals and Nursing Homes
Rent or Mortgage
The Bottom Line
Consumer spending and the U.S. economy go hand in hand. When one increases, so does the other. What Americans buy and what percentage of their purchases are spent on non-essentials reflects their interests, habits and vices. What America buys, therefore, is an economic self-portrait of the average American consumer.
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