Thursday, September 25, 2008

Spending on Food At An All-Time Historical Low; And It's Nothing At All Like The Great Depression

The chart above is based on data from the USDA's Economic Research Service showing "Food expenditures by families and individuals as a share of disposable personal income," from 1929 to 2007. In the entire history of the U.S., it's only been in the last eight years that the percent of income spent on food for Americans was in single digits - since 2000 it's been below 10%. In all previous years, spending on food was in double-digits, and in most years from 1929 to 1952 it was above 20%.

This amazing trend in lower food prices as a percent of income reflects the relentless and significant improvements in the productivity and distribution of food production, and doesn't even take into account the significant improvements in the quantity and quality of food products available for today's Americans compared to previous periods.

And perhaps this is another reason why comparisons of today's economic conditions to the Great Depression are hugely distorted - we are more than 7.5 times wealthier today compared to 1933 based on per-capita real GDP ($5,653 in 1933 vs. $42,707 in 2007), see chart below.



3 Comments:

At 9/25/2008 2:27 PM, Blogger Eric said...

Since it is a "per-capita" chart, $10,177B after-tax disposable income dollars divided by 300M U.S. population means my family of five should have roughly $169k of after-tax "disposable" income.

This is almost three times my BEFORE-tax income.

However, it is safe to say we spend less than $16,900 on groceries, so the data looks good....I guess.

 
At 9/27/2008 12:43 AM, Anonymous Anonymous said...

So why does it take 2 wage earners to scrape by now whereas for my parents, just my father working was enough?

Hint: Here in my city, houses are 11x median household income.

 
At 9/29/2008 5:13 PM, Anonymous Anonymous said...

Eric - That chart is GDP per capita, not personal income per capita.


anon at 12:43am - It "takes two wage earners to scrape by" because we have a higher opinion of what it means to scrape by than we used to. Higher expectations, means you need more resources to meet those expectations.

In the past a family may have had one car. Now you often have a car for each parent, and perhaps for each kid who's old enough to drive. And the cars are are more powerful, more reliable, and have a bunch of fancy add-ons (airbags, GPS, multi-speaker stereos, power windows and locks, etc.)

Tim

 

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