State Watch

New data details how Americans are spending their money

Getty Images

The American economy is slowly recovering from the worst recession in nearly a century, but the long hangover from the downturn means households are still spending less than pre-recession highs, according to new government data. 

The Bureau of Labor Statistics’ annual report on consumer expenditures shows the average American household spent $57,311 in 2016, higher than in any year previously recorded. It is the second year in a row in which household spending has increased, after a decade of stagnation or decline.

But adjusted for inflation, households are still spending less today than in 2006, when average expenditures reached $57,618 when adjusted for inflation. 

The largest single-line item on which Americans spend their money is housing, which accounts for nearly a third of total spending. Those who own their own homes spend more than those who rent, but renters spend more on actual rent payments than owners spend on mortgage interest. 

{mosads}Since 2006, spending on mortgage interest has fallen by nearly a third, while rent has increased by 31 percent, said Cheryl Russell, a demographer and editorial director at New Strategist Press. Spending on rent first surpassed spending on mortgages in 2012, Russell said.

A slump in global commodities prices and higher mileage standards have meant Americans are spending far less on gasoline than in previous years. The average household spent $1,909 on gasoline and motor oil last year, down 9 percent from the previous year and off by more than 20 percent from 2014, when fuel prices were higher. 

The recession’s long tail is also evident in a drop in spending on new vehicles. Many Americans delayed purchasing new cars in the midst of the recession, leading to a rush of new purchases as the recovery began. 

Much of that pent-up demand appears to have been satisfied, and spending on new vehicles dropped more than 9 percent over the last year and by nearly 17 percent over the last two years.

“Most households have now made up the car-buying they delayed in the crisis,” said Mark Muro, director of the Metropolitan Policy Program at the Brookings Institution.

As earnings and expenditures have increased over the last two years, Americans are also giving away more of their own money. The average household gave $2,081 in cash contributions in 2016, up more than $200 — or 14.4 percent — from the year before. 

That category includes gifts to relatives, to religious and charitable organizations, and to political groups, like those that backed candidates in last year’s elections. 

“The likely factor in the big increase in 2016 is political donations during the presidential election,” Russell said. 

Cultural trends, influenced in part by the recession, are also serving as a drag on spending in some cases. Households headed by adults between the ages of 25 and 44 are spending significantly less than those of similar ages a decade ago, Russell said, in part because those households are more likely to be headed by unmarried individuals, who spend less than married couples.

Marriage rates have fallen for years, and more steeply so during the recession, according to data maintained by the Centers for Disease Control and Prevention. In 2015, the latest year for which data is available, 6.9 marriages took place for every 1,000 American residents, down from a rate of 8.2 per 1,000 in 2001.

See all Hill.TV See all Video