Inconspicuous Consumption

American Demographics, April 1, 2002

The CEX reveals the '90s to be a more sober decade, in which bargain-hunting consumers looked for chances to get more while spending less. That's not to say that Americans didn't have money in their pockets: The average household spent $38,045 in 2000, up 34 percent over 1990, outpacing a 28 percent rise in inflation. But consumers directed a larger share of their budgets to health care, housing and transportation, and less to food, apparel and entertainment. A complicated interplay of economics, merchandizing and demographics helped form these big-picture trends.

The biggest factor influencing spending, according to Rogers with the BLS, is a consumer's age. In the 1990s, it was Baby Boomers between the ages of 45 and 54 - the peak earning years for Americans - who proved most influential. Over the course of the decade, these older Boomers increased their share of aggregate spending by 22 percent, to $1 trillion. Their dominant numbers helped increase total spending on health insurance and drugs (more aches and pains), education (more kids in college) and housing (more home ownership than ever before). "You don't want to put everything on the Boomers," says Rogers, "but they're still the pig moving through the python in demographic terms."

While Americans spent proportionally less on clothing in the 1990s, they blew 12 percent more on shoes, reflecting the impact of Casual Friday and a growing demand for Dockers-and-Nike ensembles. Even as U.S. consumers bypassed racks of $500 suits, they shelled out for pumped-up ergonomically correct sneakers, increasing their expenditure on footwear to an average of $343 in 2000. Boomers alone spent 22 percent more of their budgets on shoes, topping $400. Among those under 25 years old, the fastest growing footwear segment, spending jumped 183 percent, to $363. "Part of the change involves people replacing a $35 pair of loafers with an $85 pair of athletic shoes," says C. Britt Beemer, president of America's Research Group (ARG), a Charleston, S.C.-based strategic marketing company that conducts weekly consumer polls. "People no longer make fun of Imelda Marcos. They don't see any problem with buying multiple pairs of shoes to go with a number of casual outfits."

Meanwhile, the '90s were far less glorious for retailers of dairy products, floor coverings, books, postage stamps and especially, stationery. All underwent double-digit declines as a proportion of total expenditure. Stationery, once an essential medium of communication, was squeezed by the emergence of e-mail and wireless technology devices. As Internet use soared, spending on postage and stationery dropped by 23 percent between 1990 and 2000. Among those under 25 years old, spending on these old-fashioned items plummeted 49 percent, to $50 - about the cost of a modem.

Not surprisingly, spending trends in the '90s varied by race and income, though in some unexpected ways. Hispanics, for instance, disbursed a greater share of their money on food and apparel than whites or African Americans, and less on entertainment and health care. With younger and larger families than the overall population, Hispanics spent 94 percent more than the general population on infant clothes. "Hispanics have more growing families, so you'd expect to see more spending on staples and less discretionary income for entertainment," says Laurence Velcoff, a managing partner at the Miami-based Market Segment Group. "But the decreasing amount spent on health care is troubling. You worry that they're not getting enough medical care."