American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
November 2005

Top Ten Spending Trends





Fathers spend 49 minutes a day caring for children as a primary activity.



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

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.

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

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.

By Cheryl Russell, editorial director, New Strategist Publications
If you have any questions or comments about the above editorial, e-mail New Strategist at

more details on spending, see the new tenth edition of Household Spending: Who Spends How
Much on What
or the Who’s Buying reports listed in section 4 below.



The 74 percent majority of black workers and an even larger 82 percent of Hispanic workers own
neither an IRA nor a 401(k) retirement account.

2. Q & A

Why are houses getting bigger?

The average American home is getting larger. During the thirty-year span between 1974 and
2004, the median size of a new single-family home grew 39 percent, from 1,565 to 2,169 square
feet, according to the Census Bureau. During the first decade of that time period, new single- family homes increased in size by just 45 square feet, to 1,610. During the second decade, the
typical new home expanded by a much larger 290 square feet. And during the third decade, the
typical new home added another 269 square feet. What accounts for this expansion?

The common thread is the baby-boom generation. During the 1974-to-1984 time period, the
oldest boomers aged from 28 years to 38. Most of the baby-boom generation was too young to
own a home, placing little upward pressure on the size of new houses coming to market. During
the 1984-to-1994 time period, the oldest boomers aged from 38 years to 48. Most boomers were
married and had children. Most were buyers in the housing market, pressuring builders to offer
more for the money. Builders responded by adding square feet, extra bathrooms and bedrooms,
two-car garages, and other amenities.

The size of new single-family homes expanded by another 14 percent between 1994 and
2004. During those years, the oldest boomers aged from 48 years to 58, with millions becoming
empty-nesters. Demographically speaking, the pressure on new homes to expand should have
eased, if not reversed, as boomers downsized. But the downsizing did not occur for one reason:
the home office. For millions of middle-aged boomers, the home office has become a necessity to
house the space-hungry computers, monitors, and printers vital to today’s workers–many of
whom work at least part-time at home. In 1993, only 23 percent of American households had a
computer at home, according to the Census Bureau. By 2003, the figure was 62 percent–and
many households have more than one. As boomers climbed the corporate ladder, they needed
more square feet at home to house office equipment. According to the American Housing Survey,
a substantial 32 percent of new owner-occupied homes (and 23 percent of all owned homes)
include a room used for business.



Households headed by Asians spend 10 percent more than the average household and more than
twice the average on education.


Coming in December are 17 new books and reports from New Strategist to help you with
your research on American consumers. Order online at, call toll free at 800/848-0842, or
fax your order to 607/277-5009. The books and reports can be downloaded now and will be
available in hardcopy in December 2005.

The U.S. population is growing more diverse much faster than many had predicted. To help
you keep up, the new fifth edition of Racial and Ethnic Diversity: Asians, Blacks, Hispanics, Native
Americans, and Whites includes, in addition to detailed estimates and projections of the U.S.
population by race and Hispanic origin, the latest socioeconomic data on blacks and Hispanics and
more comprehensive information on Asians and American Indians. (Racial and Ethnic Diversity,
5th ed.; 1-885070-71-3; hardcover; 696 pgs.; $84.95 until December 1, 2005; $94.95 after)

Updated editions of American Men: Who They Are and How They Live and American Women:
Who They Are and How They Live record the many dimensions of mens and womens lives as
the twenty-first century unfolds. New in these editions are more details on the characteristics of
Asians, the latest labor force projections from the Bureau of Labor Statistics, and up-to-date
population projections from the Census Bureau. (American Men, 2nd ed.; 1-885070-72-1;
hardcover; 344 pgs.; $79.95 until December 1, 2005; American Women, 3rd ed.; 1-885070-73-X;
hardcover; 360 pgs.; $79.95 until December 1, 2005; $89.95 after)

Knowing how consumers spend their dollars is the key to understanding where our economy
is headed. The tenth edition of Household Spending: Who Spends How Much on What is for those
who want to know the who, what, and why of household spending. New to this edition are detailed
spending tables for Asian households. Also new are detailed spending tables for households with
incomes of $100,000 or more–up to $150,000-plus. (Household Spending, 10th ed.;
1-885070-87-X; hardcover; 656 pgs.; $84.95 until December 1, 2005; $94.95 after)

Finally, be sure to check out the popular Who’s Buying series, which has been updated and
expanded. New to the series is Who’s Buying by Race and Hispanic Origin, which includes the first
available spending data for Asian households. Also new is Who’s Buying: Executive Summary of
Household Spending, a good choice for researchers who want to understand the big picture of
where the money goes and how demographics affect spending.

Go to to see
detailed tables of contents, download books, or order hardcopies.



Only 7 percent of women aged 15 to 44 are sexually active, not trying to become pregnant, and
not using birth control.


The Who’s Buying series of reports, which are based on the tenth edition of Household
Spending: Who Spends How Much on What, bring you even more detail about how much
Americans spend by the demographics that count–age, income, household type, race and
Hispanic origin, region of residence, and education. To round out the picture, each report also
presents who-are-the-best-customers analyses of the data, showing at a glance the
demographics of household spending product by product.


The Who’s Buying series includes:

  • Who’s Buying Alcoholic and Nonalcoholic Beverages, 2nd ed.
  • Whos Buying Apparel
  • Who’s Buying at Restaurants and Carry-Outs, 3rd ed.
  • Whos Buying by Race and Hispanic Origin
  • Who’s Buying Entertainment, 2nd ed.
  • Whos Buying: Executive Summary of Household Spending
  • Who’s Buying for Pets, 2nd ed.
  • Who’s Buying for Travel, 2nd ed.
  • Who’s Buying Groceries, 3rd ed.
  • Who’s Buying Health Care, 2nd ed.
  • Who’s Buying Household Furnishings, Services, and Supplies, 3rd ed.
  • Who’s Buying Information Products and Services, 2nd ed.
  • Who’s Buying Transportation, 2nd ed.

If you need the big picture for items ranging from wine to cell phones, from pet food to
sofas, go to to see
detailed tables of contents and to order downloads or hardcopy.



Among men who did not vote in the 2004 presidential election, the largest share (23 percent) say
they were too busy.