75 Years of How Americans Spend Their Money
Consumers are the foundation of the U.S. economy, and how they choose to spend their money is a telling indicator of the overall American economic story.
The above chart from HowMuch.net, a cost information site, plots data from the Bureau of Labor Statistics (BLS) for 12 different consumer categories over a period of nearly 75 years to show the changing way in which Americans spend their money.
The data reflects median spending, and is adjusted for inflation.
Back in the Day…
One of the most interesting things about this chart is the data from 1941. What did Americans spend their money on before entering WWII, and how does that contrast with today?
Interestingly, in 1941, more money was spent on food than anything else. That year, the cost of putting food on the table averaged $8,311, coinciding with a time when nearly 15% of the workforce was working in agriculture. Today, farming is obviously much more technologically advanced, and food is also grown cheaply in other countries for consumption in America.
Food is now only the third-most important spending category for Americans at $6,759 per year, and only 1.6% of Americans now work agriculture, according to the World Bank.
Housing has also changed dramatically over time. While it has always been a key component of spending, shelter was actually cheaper ($7,537 per year) than putting food on the table in 1941. Since then, rents and house prices have risen substantially, and Americans now spend $17,798 per year on housing. This makes it by far the largest expenditure, on average, for each person.
Trending Up, Trending Down
Over the years, cost reductions can be seen the most in both clothing and food categories, which have benefited from new technologies and cheap labor in other countries.
Meanwhile, significant increases in spending can be found in healthcare, education, and transportation categories.
Lastly, the trend for money spent on transportation appears to reflect the cost of oil, which hit its highest points in the early 1980s and late 2000s. The most recent year of data from 2014 shows a notable decrease in transportation costs, which likely reflects the collapse in oil prices that occurred in mid-2014.
Mapped: What You Need to Earn to Own a Home in 50 American Cities
What does it take to own a home in the U.S. in 2023? Here’s a look at the salary needed for home ownership in the top 50 metro areas.
What You Need to Earn to Own a Home in 50 American Cities
Once a fundamental part of the American dream, the ability to own a home is drifting farther and farther away for many Americans.
Between skyrocketing prices, stagnating wages, and now rising interest rates, the deck seems to be increasingly stacked against home ownership.
Using May 2023 data tabulated by Home Sweet Home, we map out the annual salary needed to afford a 30-year mortgage (at 6.37%) to buy a home in America’s 50 most populous metropolitan areas.
The monthly minimum mortgage payment includes taxes and insurance as well, and is capped at roughly one-third of the income. This analysis also assumes that the homeowner will put down a 20% down payment.
The Least and Most Affordable American Cities to Own a Home
At the top of the list, and at the very west of the country, San Jose is the least affordable city to own a home for the average American.
One would have to earn at least $374,000 a year to afford a $1.6 million dollar home in the city.
To put those numbers into perspective, the median American annual income is $75,000, about one-fifth what’s required to buy a home in San Jose.
Here’s a look at the annual earnings needed to afford a home in all 50 largest cities in the U.S., ranked from least to most affordable.
|Rank||Metro Area||State||Median Home Price||Annual Salary|
|7||New York City||New York||$577,300||$160,233|
|15||Salt Lake City||Utah||$522,700||$122,717|
Other Californian cities, San Francisco (ranked 2nd), San Diego (3rd), and Los Angeles (4th) all require an annual income of at least $180,000 to attempt home ownership within their metropolitan boundaries.
Boston (ranked 6th) and New York (ranked 7th) represent unaffordability on the East Coast, both requiring at least $160,000 a year to buy homes there.
It’s not just the coasts that are expensive however. To buy a home in Denver (ranked 8th) and Salt Lake City (15th) means earning more than $120,000 a year.
However, cities in the Midwest and South, like Pittsburgh, Detroit, Oklahoma City, and Louisville, are far more affordable, requiring less than $63,000 a year to buy a home.
Interest Rates Rock Home Ownership Chances
Aside from the obvious price differences in housing markets, a key factor that has elevated income requirements across the board is the rapid rise in interest rates in the last year. In fact the average 30-year mortgage has pushed past 7%, the highest it’s been since the 2000s.
This means that while the median price of a house in San Jose has actually come down between 2022 and 2023, the minimum monthly payment has increased from $7,717 to $8,720 this year.
|Rank||Metro Area||State||Median Home Price||Monthly Payment|
|7||New York City||New York||$577,300||$3,739|
|15||Salt Lake City||Utah||$522,700||$2,863|
So to afford a median-priced home in the country, an American needs to earn closer to $100,000 a year, up from $75,500 in 2022. And even then, they would be priced out of owning a home in nearly half of the 50 largest cities in the country.
As a result Americans may yet further delay home ownership. Renting is now a far more attractive option, thanks to the biggest difference between rent and mortgages in over 50 years.
Healthcare1 week ago
Charted: Average Years Left to Live by Age
Revenue2 weeks ago
Ranked: The Biggest Retailers in the U.S. by Revenue
Globalization2 weeks ago
The Top 50 Largest Importers in the World
Maps2 weeks ago
Mapped: Which Countries Recognize Israel or Palestine, or Both?
Education2 weeks ago
Ranked: America’s Best Universities
Countries1 week ago
Ranked: Share of Global Arms Imports in 2022
Countries1 week ago
Ranked: Share of Global Arms Exports in 2022
Globalization1 week ago
Charted: The Industries Where Asian Companies are the Strongest