July 24, 2006
Where have we been spending more?
The government collects detailed information on how consumers spend their money. N.C. State University economist Mike Walden says that major changes are evident when you look at the data collected over several decades.
"First of all, in terms of the total percent of consumer spending, we see sharp reductions actually in the percent of our income we now spend on food and clothing," says Dr. Walden, a North Carolina Cooperative Extension specialist. "This doesn’t mean we are eating less or have fewer clothes. It’s simply because we have seen price reductions in those area, and that’s has allowed us perhaps to purchase less in terms of what it takes out of our budget.
"On the other hand," he adds, "we see higher shares of our budget going to areas like transportation and housing. Now the interesting thing here is that prices for transportation and housing also have not gone up over the last decade or two. In fact, housing in terms of homeownership is at an all time high. And, of course, people realize with the big incentives on cars that actually it’s cheaper today to buy a car than it was 10 years ago.
"But what’s happening, we think, is people simply want to have bigger houses and they want to have more vehicles. So they are devoting a bigger share of their budget to those two items."
Posted by deeshore at July 24, 2006 08:37 AM