Consumer spending is defined as the amount of money individuals and households spend for personal use, but it is so much more than that.
Judging by consumer spending statistics, personal consumption expenditure is the most significant contributor to economic growth. It is one of the most important indicators of the health and development of a country’s economy.
The money all of us spend on goods and services drives demand, keeps companies in business, and provides millions of jobs for people worldwide.
So how much do consumers actually spend? Where does most of their income go? How has the coronavirus pandemic affected how consumers spend money?
Keep reading to find out. To start, here is what we will cover below…
Top 10 Mind-Blowing Statistics on Consumer Spending
- The United States is the biggest consumer market in the world.
- Consumption spending and value-added services account for over 60% of China’s GDP.
- Consumer debt reached a record-breaking $14.3 trillion in the first three months of 2020.
- Consumer spending in March 2020 declined $1,127.3 billion.
- The average annual income before taxes in the US from July 2018 to June 2019 was $81,220.
- Americans spend an average of $18,000 a year on non-essential items.
- Consumer spending up to December 2019 reached $13.3 trillion.
- Consumers spend up to 37% of their income on housing.
- US households spent about $3,226 on entertainment in 2018.
- 44% of US consumers spent more than usual on health and hygiene products because of COVID-19.
Now that we’ve covered the most important stats and facts let’s dive into more details.
Consumer Spending Statistics Across the World
From the four categories used to calculate a country’s GDP, consumer spending is the most significant contributor, usually accounting for over half of a country’s economy.
1. Consumer spending as a percentage of GDP is typically about 60%.
(The Global Economy)
Not every economy is the same, though.
In some countries, the share of consumer spending as part of the GDP is lower. For instance, in Brunei consumption accounts for 21.51% of the GDP.
It can also be higher than the average. In Egypt, consumer expenditure contributed 84.35% of the country’s GDP in Q3 2019.
2. The United States is the biggest consumer market in the world.
(Capstone Advisory Group)
Based on consumer spending by country, at $12.5 trillion, in 2017, US consumers spent almost three times more than China, the second-biggest consumer market in the world.
3. Consumption spending and value-added services account for over 60% of China’s GDP.
China was poised to surpass the US as the biggest retail market in 2020.
Even though consumer spending up to September 2019 increased (an 8.2% spike in retail sales), the overall growth of the Chinese economy was slower. Growth was only at 6% in Q3 2019, which was the lowest recorded in three decades.
US Consumer Spending Statistics
Consumer spending in the US has been on the rise since the Great Recession. But how much do Americans spend on services and goods?
4. Consumer spending as a percentage of US GDP equals 67.6%.
(Federal Reserve Bank of St. Louis)
The contribution of personal consumption expenditure had increased significantly from Q1 1967 when it accounted for 58.6% of the US economy.
5. At $63,151 per capita, personal consumption expenditure was highest in the District of Columbia, a 2018 US spending analysis shows.
After DC, Massachusetts had the highest per capita PCE in the US at $55,095.
On the other hand, Mississippi recorded the lowest at $31,083.
Looking at consumer spending by state, Utah reported the fastest growth with expenditures on housing and utilities going up 5.2% and healthcare expenditure increasing by 5%.
6. Except for education, an increase in consumer spending was recorded in all of the major components, data from July 2018 to June 2019 indicates.
The most significant increase was noted in spending on transportation, which went up by 6.9% from July 2018 to June 2019 compared to the same period the previous year.
Spending on education went down by 7.1% as a result of a decline in elementary and high school tuition and expenditures for finance and interest rates on student loans.
7. Consumer spending in March 2020 declined $1,127.3 billion.
This 7.5% decrease in PCE was caused by an $829.9 billion reduction in US spending on services and a $104.9 billion decline in spending on goods.
This was the sharpest monthly decline since 1959, the Commerce Department consumer spending report shows.
8. 51% of Americans say that they spend less money than they used to, current consumer spending statistics reveal.
US consumers of all income groups are spending less than usual.
The last time cutbacks like these were reported was in 2010, after the Great Recession.
Optimism is higher now, though. In 2010, 67% expected reduced spending to be the “new normal” compared to 53% of respondents who feel that way now.
What Influences US Consumer Spending?
Several factors determine purchasing power and personal spending. The most important of which are income/employment, consumer debt, and the Consumer Confidence Index.
9. The average annual income before taxes in the US from July 2018 to June 2019 was $81,220.
The average income before taxes has been going up since 2016, reaching $78,635 in 2018.
However, so has the expenditure. From an average of $57,311 a year in 2016 to $61,224 in 2018.
10. Personal income and disposable personal income decreased by 2% in March 2020.
Personal income and disposable personal income are the most significant factors affecting consumer spending.
In March 2020, personal income decreased by $382.1 billion. Disposable personal income decreased by $334.6 billion, which will have a severe impact on consumer spending in 2020.
11. US consumer confidence dropped marginally in December last year.
US consumer confidence was measured at 126.5 in December 2019. It declined from 126.8 in November and the projected 128.2.
The Consumer Confidence Index shows how positively or negatively consumers view their expected financial situation.
12. Consumer debt reached a record-breaking $14.3 trillion in the first three months of 2020.
This is a 1.1% increase from Q4 2019, and $1.6 trillion higher than the previous highest consumer debt recorded in Q3 2008 at the height of the Great Recession.
What Do Consumers Spend the Most Money On?
Some of the major categories American consumers spend money on include housing, transport, entertainment, insurance, and healthcare.
13. Americans spend an average of $18,000 a year on non-essential items.
Consumer discretionary spending, which covers purchases of non-essential goods and services, amounts to roughly $1,497 a month.
Eating out and drinks with friends or co-workers are the highest non-essential monthly spends at $209.38 and $188.68, respectively.
14. Consumer spending up to December 2019 reached $13.3 trillion.
The majority of the spending or 64% went towards services, with housing and healthcare being the biggest consumer spending categories. Both reached $2.2 trillion.
Over one-third of the total expenditure went on goods. Of this expenditure, $3 trillion was on non-durables and $1.8 trillion on durable goods.
15. Consumers spend up to 37% of their income on housing.
According to the consumer spending report for 2018, around $20,091 from the average American budget is spent on housing. This includes mortgage payments (but not the principal), maintenance, utilities, furnishing, and appliances.
Single people spent the most on housing, or to be exact, 36.5% of their annual budget. Single parents with at least one child under 18 spent 35.8% on housing.
16. The US spends more on healthcare than any other country in the world.
Healthcare expenditure in the US increased by just 0.8% in 2018, reaching an average of $4,968 per year. In 2017 it had gone up by 6.9%.
17. Personal insurance and pensions averaged $7,354, midyear, according to consumer spending statistics.
Americans spent around $6,857 of this amount on pensions and social security. They spent $497 on life insurance and other types of personal insurance.
18. When it comes to food, the average American spending per year increased by 2.5% from 2017 to 2018.
In 2018, Americans spent a total of $7,923 on food. Of this, $4,464 was spent on food at home. Furthermore, $3,459 was spent on takeout, fast food, buffet meals, school lunches for kids, and snacks from vending machines, i.e., food away from home.
20% of the population with the lowest income spent the most on food or 15.6% of their annual income.
19. Americans spend an average of $1,859 on apparel and services.
They also spent an average of $10,410 on transport, which includes the cost of vehicles, gasoline, maintenance, insurance, and spending on public transport. They also spent $1,398 on education.
Other expenditures include $1,946 on cash contributions, i.e., charity donations, child support payments and alimony, and care for students living away from home.
20. US households spent about $3,226 on entertainment in 2018.
This category covers admission fees and tickets to events, a mean sum of $766 a year.
It also includes spending on audio and visual equipment and services, amounting to $1,030 and pet spending, which amounted to an average of $662 a year.
Streaming services are also a part of this category. 69% of Americans pay for at least one streaming service, adding up to an average of $264 a year.
Finally, entertainment spending includes fitness and health clubs (US health and fitness clubs had 62.5 million members in 2018, who spent an average of $515 a year).
Effects of COVID-19 on Spending and Consumer Statistics
The current coronavirus pandemic and the ensuing curfews, lockdowns, and travel bans have created unprecedented market conditions that will impact consumer spending in 2020.
Most likely, in the years to come as well.
21. Global consumer spending on luxury goods is forecast to decline by a staggering 18% in the second quarter of 2020.
China will be impacted the most. Sales are expected to go down by 22%.
The US will also be affected by a $52 billion loss from the sale of luxury goods. While Italy, France, and the UK are expected to suffer considerable losses as well.
22. The pandemic will hit travel and apparel industries the hardest, consumer spending trends reveal.
Social isolation and travel restrictions are expected to reduce spending in the travel industry. This will result in an 86% decline in revenue in April.
Spending on clothes is also down, most notably in China. There consumption expenditure on apparel is 40–50% lower compared to the period before the pandemic.
23. 44% of US consumers spent more than usual on health and hygiene products because of COVID-19.
40% said they spent more on household cleaning products. 32% reported higher expenditures on food and drinks. On the other hand, 81% said that they spend less than usual on going out due to the pandemic.
24. When it comes to consumer spending, online statistics indicate that over a third of US consumers expect to spend more on online marketplaces because of the COVID-19 outbreak.
It’s not just Americans that are increasing their spending on e-commerce because of the current COVID-19 situation.
According to Canadian consumer spending statistics, 24% of Canadian consumers plan to spend more on online shopping in the coming three months as of March 2020.
How much do consumers spend each year?
The 12 months from July 2018 to June 2019 had consumers in the USA spending $62,428 annually on average.
Where do consumers spend the most money?
The US is the biggest consumer market in the world, representing 26% of the global consumer market.
What do consumers buy most frequently?
Almost two-thirds of consumer spending in the US is on services, which includes healthcare, real estate, services from non-profits, financial services as well as cable and internet services.
The other one-third of consumer spending is on goods, both durable (cars, furniture) and non-durable (clothes, food, and gas).
Is consumer spending good for the economy?
Consumer spending is a driving force of the economy.
Even a small decline in personal consumption expenditure can significantly damage the economy.
However, too much spending is also harmful. When the spending outpaces manufacturers’ ability to produce and provide services, prices increase, thus creating inflation.
Is consumer spending increasing?
Looking at the data from July 2018 to July 2019, the average spending increased by 2.7%.
Who is the largest consumer in the United States?
According to customer demographics, boomers spend the most at around $548.1 billion a year. They are followed by Gen Xers at $357 billion, while millennials’ spending is at $322.5.
Despite the boomers’ spending power, Gen Z has the most annual transactions. They have around 358 compared to 330 transactions of millennials and 305 of Gen X.
What are the top three categories of consumer spending?
The top three services that US consumers spent the most on in 2019 are housing, healthcare, financial services, and insurance.
What are the four major categories of expenditure?
The four categories of expenditure used to calculate a country’s GDP are consumption, investment, government spending, and net exports.
What can we learn from these facts and figures?
For retailers, these stats provide invaluable insight into the shopping habits and trends of consumers.
For analysts, on the other hand, they are the number one indicator of where the economy might be headed and how soon it can recover from the current crisis.
But if you are an average consumer, the consumer spending statistics we’ve reviewed so far will give you a clearer picture of how to manage your budget better and keep your spending under control.