August 11, 2009
Spending on the essentials
Traditionally, when we think of consumer essentials or necessities, we think of food, housing, clothing and transportation. Over time, has it become harder or easier for us to afford these must-haves?
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"Well, let's take a trip down memory lane. In 1950, 83 percent of consumer spending was just on those four items: food, housing, clothing and transportation. By 1975, it had fallen to 77 percent, and today it's a little over two-thirds, 68 percent. So we have made progress, if you will, in being able to afford the essentials. But there are dramatically different trends. If you look at the individual necessities, what we spend on food and clothing has come way down. However, what we spend on transportation and housing is up. Now does that mean transportation and housing is more expensive? Not necessarily. Economists who look into this find that the main reason that we're spending more relatively on transportation and housing is that we're consuming more of those items or goods. We have more cars. We have better cars. And housing, we have more square footage with more amenities. So overall, I think the picture on spending on the essentials looks very, very good."
Posted by Dave at August 11, 2009 08:00 AM