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Navigating Shifts in American Consumer Spending: Insights from the 2022 Consumer Expenditure Survey

April 3, 2024 Connor Allen

An illustration of a person's hand holding US dollars with a bunch of icons around it representing different things that person might want to spend their money on, including cell phones, cars, travel, homes, food, health care, fitness, tools, electronics, food, large appliances, jewelry, pets, and clothing.The US Bureau of Labor Statistics (BLS) released the 2022 Consumer Expenditure Survey findings in September last year. The survey provided critical data about consumer spending trends and how much households spend on specific items (e.g., food, clothing, healthcare, education, housing, etc.).

The data provided in the survey is essential for impact analysis as it informs the basis for understanding household spending patterns, changes in consumer preferences, and their cascading effects on various sectors. The table below provides an overview of income and expenditures.Table Title: Average Income and Expenditures of all Consumer United, 2020-2022. This table presents data from the U.S. Bureau of Labor Statistics Consumer Expenditure Survey showing the number of consumer units, average income before taxes, average annual expenditures, spending by category, and percent changes over the period from 2020 through 2022. Dollar amounts are annual averages per consumer unit. The number of consumer units increased from 131.2 million in 2020 to 133.6 million in 2021 and 134.1 million in 2022. This represents a 1.8 percent increase from 2020 to 2022. Average income before taxes rose from 84,352 dollars in 2020 to 87,432 dollars in 2021 and 94,003 dollars in 2022. Income increased by 11.2 percent between 2020 and 2022. Average annual expenditures increased from 61,332 dollars in 2020 to 66,928 dollars in 2021 and 72,967 dollars in 2022. Total expenditures rose 18.1 percent over the two-year period. All spending categories listed below represent shares of 2022 expenditures. Food spending increased from 7,210 dollars in 2020 to 8,289 dollars in 2021 and 9,343 dollars in 2022, accounting for 12.8 percent of total 2022 expenditures. Food spending rose 27.7 percent from 2020 to 2022. Food at home increased from 4,935 dollars in 2020 to 5,703 dollars in 2022, representing 7.8 percent of 2022 expenditures and a 15.0 percent increase over the period. Food away from home rose from 2,375 dollars in 2020 to 3,639 dollars in 2022, accounting for 5.0 percent of total expenditures and increasing 47.7 percent from 2020 to 2022. Alcoholic beverages increased from 478 dollars in 2020 to 583 dollars in 2022, representing 0.8 percent of expenditures and a 21.1 percent increase over the period. Housing was the largest expenditure category. Spending increased from 21,417 dollars in 2020 to 24,298 dollars in 2022, accounting for 33.3 percent of total expenditures. Housing costs rose 13.0 percent between 2020 and 2022. Owner housing costs increased from 7,473 dollars to 8,230 dollars, representing 11.3 percent of total expenditures. Renter housing costs rose from 4,408 dollars to 4,990 dollars, representing 6.8 percent of expenditures. Other housing expenses increased from 722 dollars to 1,287 dollars, representing 1.8 percent of expenditures and rising 67.1 percent over the period. Lodging on out-of-town trips rose sharply from 318 dollars in 2020 to 837 dollars in 2022, accounting for 1.1 percent of expenditures and increasing 128.5 percent. Apparel and services increased from 1,434 dollars in 2020 to 1,945 dollars in 2022, accounting for 2.7 percent of expenditures and rising 33.2 percent. Transportation spending increased from 9,826 dollars in 2020 to 12,295 dollars in 2022, representing 16.9 percent of total expenditures and a 23.7 percent increase. Vehicle purchases declined slightly from 4,523 dollars in 2020 to 4,496 dollars in 2022. Gasoline, other fuels, and motor oil increased significantly from 1,568 dollars to 3,120 dollars, accounting for 4.3 percent of expenditures and rising 82.2 percent. Public and other transportation increased from 263 dollars to 845 dollars, representing 1.2 percent of expenditures and increasing 158.8 percent. Healthcare spending rose from 5,177 dollars in 2020 to 5,850 dollars in 2022, accounting for 8.0 percent of total expenditures and increasing 12.6 percent. Health insurance increased from 3,667 dollars to 3,843 dollars. Medical services increased from 864 dollars to 1,184 dollars. Entertainment spending increased from 2,909 dollars in 2020 to 3,458 dollars in 2022, accounting for 4.7 percent of expenditures. Fees and admissions increased from 425 dollars to 833 dollars. Pets, toys, hobbies, and playground equipment increased slightly from 859 dollars to 908 dollars. Other entertainment-related equipment and services increased from 576 dollars to 698 dollars. Personal care products and services increased from 646 dollars in 2020 to 866 dollars in 2022, accounting for 1.2 percent of expenditures. Reading expenditures remained relatively flat, increasing slightly from 114 dollars to 117 dollars. Education spending increased from 1,271 dollars in 2020 to 1,335 dollars in 2022. Tobacco products and smoking supplies increased from 315 dollars to 371 dollars. Miscellaneous expenditures increased from 907 dollars to 1,009 dollars. Cash contributions increased from 2,283 dollars in 2020 to 2,755 dollars in 2022, accounting for 3.8 percent of expenditures. Personal insurance and pensions increased from 7,246 dollars to 8,742 dollars, representing 12.0 percent of expenditures. Pensions and Social Security contributions increased from 6,460 dollars in 2020 to 8,223 dollars in 2022, accounting for 11.3 percent of total expenditures. Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey, 2020, 2021, and 2022.

In 2022, the total average annual expenditures for consumer units were $72,967, an increase of 9% from 2021 and 18.1% from 2020. In comparison, the average income before taxes was $94,003, a 7.5% increase from 2021 and an 11.2% increase from 2020, indicating expenditures increased faster than income.

Focusing on the individual expenditure groups, housing, unsurprisingly, represents the largest share of consumer expenditures at 33.3% in 2022, an increase of 7.4% since 2021. This increase was most significantly driven by lodging costs, suggesting increased travel activities and hotel costs during this period.

Transportation expenses represented the next largest share at 16.9%, having risen 12.2% since 2021. Higher fuel prices and increased use of public transit can potentially explain this increase in spending. Interestingly, vehicle purchase spending decreased by 6.9%, reversing the trend from 2020-2021. Food expenses represented 12.8% of expenses and grew by 12.7%, with an apparent increase in dining out (food away from home expenditures), signaling a return to pre-pandemic habits and increased associated costs.

Apparel and services spending increased by 10.9% from 2021, a total increase of 33.2% since 2020. There has been a notable increase in footwear spending within the category, highlighting changing consumer priorities and a return to social activities.

Personal care products and services also saw significant growth, continuing the trend from 2021 and underscoring an ongoing focus on health and wellness. Personal insurance and pension expenditures also rose, driven by higher pensions and Social Security contributions.

While most categories increased, entertainment spending declined by 3.1%, indicating a shift in leisure preferences or budget allocations.

Overall, the changes in spending baskets in 2022 can be attributed to several factors beyond the raw data, including:

  • Evolving consumer preferences
  • Shifts in societal norms
  • Technological advancements
  • Changes in the global economy
  • Reactions to the pandemic

What is Causing These Shifts in Consumer Spending?

  • Evolving Consumer Preferences: Consumer priorities have shifted towards more sustainable and ethical products. This change is reflected in the increased spending in sectors like personal care, which can include eco-friendly and ethically sourced products. Additionally, the rise in apparel spending might indicate a preference for quality and durability over cheaper, disposable options.
  • Shifts in Societal Norms: The significant increase in cash contributions, including gifts and charitable donations, suggests a shift in societal values towards more altruistic behavior. This could be influenced by a heightened awareness of social issues or an increased desire to support friends and family financially during uncertain times.
  • Technological Advancements: Technology continues to shape consumer spending, with more people shopping online, which can affect individual expenditure categories differently. For instance, it might explain the decline in entertainment spending if consumers opt for digital subscriptions and home entertainment over traditional out-of-home leisure activities.
  • Changes in the Global Economy: The global economic landscape, influenced by supply chain disruptions and fluctuating commodity prices, has impacted consumer spending. For example, the rise in transportation and food costs can be linked to higher fuel prices and ongoing supply chain challenges.
  • Reactions to the Pandemic: As the world has adapted to the post-pandemic environment, consumer behaviors have been shifting back towards pre-pandemic norms, evidenced by increases in consumer spending on dining out and other social activities. However, the pandemic has also left a lasting impact on how individuals allocate their spending, with health and wellness continuing to be a significant focus, which is supported by the growth in spending on personal care products and services.

Understanding these underlying factors provides a more nuanced picture of why American consumers’ spending habits changed in 2022. These shifts reflect a complex interplay between individual choices, societal trends, and global economic conditions, all of which contribute to the dynamic nature of the consumer economy.

Interested in learning more about the impact of new household spending resulting from a new residential development? Camoin Associates’ Impact Analysis Team can help. Renowned for our expertise and comprehensive approach, we collaborate closely with our clients to precisely frame the issue and tailor a methodology that aligns with the target audience, ultimate objectives, and industry best practices. Understanding that numbers can be daunting, we simplify our sophisticated, technical analyses into easily understandable formats such as infographics and dashboards.

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