Wednesday, May 12, 2021

Big Spending Declines in 2020

Of course household spending declined in 2020. We know that. We all cut back. But the latest mid-year household spending statistics released by the Bureau of Labor Statistics reveal just how deep those cuts were.

The Bureau of Labor Statistics produces not only calendar-year household spending data, but also mid-year data. The latest release shows average household spending for the July 2019 through June 2020 time period. A comparison of these mid-year data with those from one year earlier captures the dramatic decline in household spending as the coronavirus pandemic swept the country. 

Percent change in average household spending on selected products and services, July 2018-June 2019 to July 2019-June 2020 (in 2020 dollars)
  -3.4%: total spending by the average household
 +1.9%: food at home
 +3.8%: maintenance/repairs for owned homes
-14.8%: food away from home
-18.6%: women's clothes 
-20.1%: men's clothes
-27.8%: public transportation
-31.7%: fees and admissions to entertainment events

Overall household spending fell 3 percent by mid-year 2020 compared to the previous mid-year number, after adjusting for inflation. The decline was much greater for the sectors most impacted by the pandemic. Average household spending on fees and admissions to entertainment events plunged 32 percent. Spending on public transportation fell 28 percent. Spending on food away from home (mostly restaurant meals) was down 15 percent. Meanwhile, spending on food at home (groceries) grew 2 percent, and spending on maintenance and repairs for owned homes (home improvements) climbed 4 percent. None of these trends is a surprise.

But there are a couple of surprises uncovered by Demo Memo's analysis of the mid-year spending statistics. Average household spending on alcoholic beverages did not increase as some have suggested. Instead, spending on alcoholic beverages fell 4 percent between 2018-19 and 2019-20, after adjusting for inflation. This decline likely is the result of greatly reduced alcoholic beverage spending at bars and restaurants during the pandemic. Another surprise was a decline in spending on pets. With so many working from home, there were reports of a surge in new pet owners. But average household spending on pets fell 5 percent between 2018-19 and 2019-20.

Source: Demo Memo analysis of the Bureau of Labor Statistics' Consumer Expenditure Survey

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