Big Changes in Discretionary Spending Habits
- June 28, 2011
Many people would say “what discretionary spending money?” these days with high unemployment, household debt and no real wage increases. Recent data released by the Commerce Department shows that the portions of household income that consumers spend on cars, food, and household items have changed, somewhat dramatically since the beginning of 2009.
While the financial recession officially started in 2008 (or the peak was in October 2007), most people did not feel the real recession hit until the massive layoffs that happened in the beginning of 2009. With this came sharp cutbacks in spending until individuals could assess how much money they would need to ride out the recession.
Consumer spending has rebounded in total off of the lows of 2009, but most importantly there has been a shift in the percentage of the spending total on different categories within the discretionary spending.
Cars have remained at about 16-17% of spending, but gas costs have gone from 8% to 12%. That money for gas has to come from somewhere, and it’s been taken from department stores (-1%), food and beverage (-1%), and bars and restaurants (-1%).
Has anything gotten more of our money than the oil companies? Internet sales are up (1%) which offsets some of the retail store losses (much of which is probably Amazon.com taking from local merchants).
Result: most people have a fixed amount of household debt to pay every month, but the discretionary portion of their wages in increasingly going in the tank out out the tailpipe at a much higher rate than they are shifting their buying habits online. The end result is that retail stores and food/beverage establishments are taking the brunt of the increase in energy costs.