Knowing how you spend your money is one of the basic tenets of financial responsibility. This week, we’re partnering with ABC’s “Good Morning America” to look at Americans’ spending on food over the last several decades.
In 2009, Americans spent $1.2 trillion on food. 51.4 percent of this spending was on eating at home, and the other 48.6 percent on eating out. But as surprising as it may seem, we’re spending less on food than we were just a few decades ago.
In the 1950s, Americans spent 32 percent of their household budgets on food – a bigger fraction than they spent on anything else, including housing and medical care. That percentage has steadily declined. By 2007, the typical household spent only 15 percent of its budget on food, compared to 43 percent on housing and 18 percent on transportation.
This trend has a name: Engel’s Law, which states that as income grows, food spending declines proportionately. This decrease is partially due to the popularity of fast food, as well as pricing benefits that come from larger, more cost-effective grocery stores.
A significant shift in food spending patterns came during the period of economic decline between 2007 and 2009, when household incomes dropped and food prices went up. The country’s spending on food went down 5 percent during this time. The reason for much of this decrease: Americans were spending less on dining out.
How do you divide your food budget between dining at home and eating out? How do you spend on food now compared to during the recession?