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Consumer Expenditures in 2021

The year 2020 was marked by the onset of the COVID-19 pandemic and an associated decline in consumer spending. As COVID-19 restrictions were repealed and the economy began to open, one would expect 2021 to have been welcomed as the beginning of a strong recovery to pre-pandemic levels for expenditures on entertainment, travel, food, apparel, gasoline, healthcare, and more. However, while certain constraints (e.g., government-mandated business closures) were loosened from the early pandemic days, consumers faced a number of challenges from the pandemic that carried into 2021. Among those issues were rising prices, global supply chain constraints and microchip shortages, and further sweeping COVID-19 waves.¹

How did these new challenges affect the spending patterns of the typical household? This report analyzes integrated data from the Diary and Interview Survey components of the Consumer Expenditure Surveys (CE). (For details about these components, including how their results are integrated in publication, see the technical notes section.) The data in this report is drawn from a collection of CE tables. The incomes and expenditures shown in the tables throughout this report are expressed as nominal values, representing spending in U.S. dollars as reported by surveyed consumers.² Through the CE, the Bureau of Labor Statistics (BLS) collects information from the reference person of consumer units (CUs).³

Given the unusual conditions facing consumers in 2020 and 2021, the next section provides context for the economic conditions that influenced expenditure trends before and during 2021.

Effects of inflation and supply chain disruptions in 2021

Prices rose 4.7 percent from 2020 to 2021, as measured by the Consumer Price Index (CPI) for All Urban Consumers (CPI-U, U.S. city average, all items, base period 1982–84=100), compared with 1.2 percent from 2019 to 2020. In each successive month of 2021, inflation had been on a continual upward trend, beginning with a 12-month percent change of 1.4 percent in January and reaching 7.0 percent in December. Key expenditures that have been especially affected by inflation in 2021 include gasoline, used cars and trucks, and food at home and away from home. The average annual change from 2020 to 2021 in gasoline prices alone was 36.0 percent. Other notable price increases include a 26.6-percent increase for used cars and trucks and a 3.9-percent increase for food. For a snapshot of how inflation could impact measures of consumer spending in 2021, take a theoretical family that spent 5.0 percent more on goods and services relative to 2020.

The 5.0 percent represents their nominal spending growth. Nominal spending is the amount, measured in dollars, that the consumer provided in exchange for the good or service of interest; all data in the CE are reported and published in nominal terms. As mentioned previously, average annual inflation rose 4.7 percent. Real spending growth, defined as the rate of nominal spending growth minus the rate of inflation, was 0.3 percent (i.e., 5.0 minus 4.7 percent), meaning that much of the increase in the family’s spending can be attributed to higher prices rather than to an increase in quantities purchased or living standards.

Two factors that simultaneously accompanied and contributed to inflation in 2021 were an ongoing supply chain bottleneck and the associated semiconductor chip shortage. Microchips are integral components of a number of goods a typical CU purchases on an annual basis. Whether the good is a cell phone, laptop, or a new vehicle parked in the driveway, all utilize microchips. When critical components to essential electronic devices are hard to find, this naturally reduces the capacity to produce those goods, which negatively affects the overall supply and leads to higher prices. Compounding the pressure on the average CU of inflation and supply chain constraints, further waves of COVID-19 emerged in 2021. In the latter half of 2021, the more transmissible Delta and Omicron strains caused many companies to extend their work from home policies and caused consumer expenditures on travel to remain moderately unstable.⁴ The emergence of more transmissible strains could have put downward pressure on spending demand for the most-at-risk cohorts, at least for expenditures such as food away from home and entertainment. The confluence of these three factors was certainly felt by consumers as they plotted their spending course for 2021.

Expenditure trends: 2018 to 2021

Table A depicts annual expenditure values and their associated percent changes for both total expenditures and its major components (i.e., expenditure categories such as food) between 2018 and 2021. Average annual expenditures rose by 9.1 percent to $66,928 in 2021, up almost $5,000 from 2020 and up $3,900 from 2019—a noticeable reversal from the 2.7-percent decline from 2019 to 2020. Income continued to grow from 2020 levels but had not reached the level of income growth seen in 2019, when income rose 5.4 percent. Average annual income rose 3.7 percent from $84,352 to $87,432 at the CU level.

In 2021, spending was higher than 2020 in 12 of the 14 expenditure subcategories. For example, after declining more than 10 percent in 2020, food spending shot up 13.4 percent in 2021, with noticeable surges in both food at home and food away from home spending. Food at home spending climbed 6.6 percent, reaching an annual amount of roughly $600 above pre-pandemic levels. This was mainly driven by increased spending in the protein (meat, poultry, fish, and eggs) and produce sectors. As of December 2021, both expenditures have seen annual average percent changes in inflation of 6.6 percent and 3.2 percent, respectively.⁵ Food away from home spending rose 27.6 percent but was still nearly $500 below 2019 levels, likely driven by reluctance of at-risk demographics to eat out amid the multiple COVID-19 waves that emerged in 2021. (See table A.)

Transportation spending surged 11.6 percent in 2021, climbing from lows in 2020 and exceeding 2019 levels. Rising 37.0 percent in 2021, gasoline, other fuel, and motor oil spending was a key driver of the increase, along with vehicle purchases, which rose 6.7 percent. The loosening of travel restrictions, gradual return to the office, and rising gasoline prices surely influenced the rise in expenditures of gasoline, other fuel, and motor oil. Supply chain disruptions for semiconductors and microchips, both used to manufacture new vehicles, induced a negative supply shock (i.e., lessened production of goods or services than in “non-shock” times) in the new vehicle market. Any negative supply shock leads to higher prices, which in turn can lead to higher spending. The lack of new vehicle inventory might have also pushed would-be purchasers into the used car market, raising the cost of used cars, and driving up vehicle purchase expenditures. While public and other transportation spending did climb 71.9 percent, its smaller proportion of the transportation category, relative to gasoline and vehicles, would lead to it having less upward bias in transportation spending. Public and other transportation has also yet to return to 2019 spending levels. (See table A.)

Housing expenditures, which account for the largest share of total spending, rose 5.6 percent in 2021. Run-ups in prices for both owned homes and rental units (such as apartments) undoubtedly contributed, as shelter accounts for just over half of total housing expenditures. While spending on owned dwellings rose 1.6 percent, rental properties jumped at almost four times that rate, or 6.3 percent, in 2021. Low nominal interest rates and rising housing demand in early 2021 created conditions in which housing prices took off. According to the St. Louis Federal Reserve, the median sale price of a home reached $423,600 in the fourth quarter of 2021, almost $65,000 above the 2020 fourth quarter median price of $358,700.⁶ Concurrently, the trend in the 30-year fixed rate mortgage began to inch upward, fluctuating over the year, but ending up 0.44 percentage points higher at the end of 2021 relative to 2020. Together, increases in mortgage rates and housing prices, pushed up owned dwelling (mortgage) expenditures.⁷ Higher housing prices could have pushed prospective home buyers into the rental market, driving up rental rates. Double digit run-ups in out-of-town lodging of 89.9 percent, other lodging (which includes hotel/motel, B&B accommodations, etc.) of 36.1 percent, and household furnishings and equipment of 15.1 percent further contributed to the rise in housing spending.

Entertainment and apparel and services both rose by over 20 percent, 22.7 and 22.3 percent, respectively (chart 1). Double-digit spending growth was also observed in personal care products and services, alcoholic beverages, food, and transportation, all following the model of looser COVID-19 restrictions, gradual returns to in-person work, and higher demand for entertainment and travel. Six subcategories grew at rates below 10 percent. Healthcare spending, for example, rose 5.3 percent, potentially because of elective surgeries resuming where consumers were able to book screenings. One expenditure category did not change, and one declined slightly. Spending on reading material remained constant at $114 per year, while spending on education fell by 3.5 percent, potentially because of reduced annual amounts paid by CUs on tuition and student loan payments, as shown in our detailed level tables, which can be found in the technical notes section (detailed tables, 1984–21).

Expenditure shares: how do consumers divide up their spending?

The concept of expenditure shares is critical in analyzing short and long run spending dynamics. In the short run, expenditure shares illustrate the relative importance of the various expenditure categories in everyday life, for example, the percent of total spending being directed to food relative to healthcare or housing. In the long run, changes in shares reflect changes in living standards. For example, CUs who allocate lower shares to food and shelter can spend larger shares on entertainment, cash contributions, personal care products and services, and other discretionary goods and services that are not as affordable to those on tight budgets.

The largest share of consumer spending is generally allocated to housing (chart 2A). From 2018 to 2021, the share ranged from 32.8 percent in 2018 and 2019 to 34.9 percent in 2020. Following housing, transportation, food, personal insurance and pensions, and healthcare round out the top five expenditure shares (chart 2B). For the purposes of this analysis, the six expenditure categories to which consumers allocate on average the smallest shares of their total expenditures are combined into the all other expenditures category (chart 2A). Expenditures in this category include alcoholic beverages, personal care and products, reading, education, tobacco products and smoking supplies, and miscellaneous expenditures.

Recent changes in expenditure shares show a mixed picture. Of the four expenditure categories, five rose, five remained unchanged, and four declined from their 2020 levels. As displayed in table B and chart 2, CUs in 2021 allocated slightly larger shares of their total spending toward entertainment, transportation, food, and apparel and services, all rising between three and six tenths of one percentage point. The fifth category that rose was in the all other expenditures category. Personal care products and services increased by a tenth of 1 percentage point.

Expenditure shares marginally declined in housing (1.1 percentage points), but it remains by far the largest spending category, where 33.8 cents for every dollar of spending outpaces the next closest category (transportation) by 17.4 cents per dollar (chart 2B). Similarly, the average consumer contributed fewer cents on the dollar to personal insurance and pensions, cash contributions, and healthcare in 2021. Consumers spent half a percentage point less on all other expenditures in 2021 (6.4 to 5.9 percent), leaving the remaining 94.1 percent of spending, or 94.1 cents on the dollar, to the top eight expenditure categories (chart 2A).

Income and expenditures by income quintile

Even in times of price stability, income is arguably the most important predictor of expenditures. Given COVID-19 related disruptions to the economy in 2020 (increased unemployment, etc.), it is especially important to examine changes in income from 2020 to 2021 before considering changes in spending patterns at that time.

In 2021, gains in nominal income were observed across the board for CUs in all income quintiles except for the bottom quintile of earners, which fell by 0.4 percent. This reduction in nominal income can be partly attributed to a decline in wages and salaries of 12.3 percent and in Social Security, private retirement, and government retirement of 2.5 percent. All other cohorts saw gains between 0.6 and 3.8 percent, with the general trend being, the higher the income cohort, the greater the percentage gain in before-tax income (table C).

Total expenditures rose across the board for all income groups, with increases ranging from 4.6 percent for the fourth income quintile to 11.6 percent for the highest income quintile. The second and highest income quintiles' expenditure patterns outpaced change in expenditure by all consumers of 9.1 percent (table A), while the lowest, third, and fourth lagged behind anywhere from 0.6 to 4.5 percentage points relative to the 9.1 percent for all CUs. (See chart 3.) The 11.6-percent increase observed for the highest income group is attributed to a handful of main expenditure categories, including a 32-percent increase in food away from home, a 32.8-percent increase in entertainment, a 14.3-percent increase in transportation, and a 10.7-percent increase in personal insurance and pensions. (See table C.) These four categories alone account for 59.2 percent of the highest quintile’s total spending jump of over $13,000. The highest quintile follows the spending pattern seen in table A in which food, transportation, and entertainment all rebounded noticeably in 2021 from their 2020 COVID-related declines. Unlike all other quintiles, the lowest saw a reduction in transportation spending of 2.1 percent; the other quintiles saw jumps of 3.0 to 28.5 percent. Individuals in the lowest income quintile reduced spending on new cars and trucks. This was partially offset by higher spending on used cars and trucks and greater use of public and other transportation.

Analysis of selected expenditures

The following section analyzes trends in individual expenditures in closer detail. The sections will cover ways in which the pandemic caused consumer spending patterns to shift. For housing, and to a lesser extent food spending, the pandemic caused shifts in consumers’ preferences for two substitutes. For housing, the pandemic caused consumers to reevaluate whether it was in their interest to rent or buy. In food, pandemic-related concerns about safety and government-mandated closures made many consumers rethink their mix of food at home and food away from home. In categories in which consumers had a greater number of choices, the focus is on how the pandemic affected consumers’ level of spending in that category.

Dining out or cooking at home: how are consumers spending food dollars?

The COVID-19 pandemic led to changes in consumer spending patterns for many goods and services, food included. There are two general types of food expenditures: food at home and food away from home. Food at home includes food purchased from grocery stores or similar venues, for which preparation is needed. Food away from home includes food from restaurants or similar venues, where the consumer pays for the service of food preparation. It may also include delivery to a consumer’s home or table or the implicit costs of nonessentials—such as convenience, ambiance, and so forth. Therefore, during the pandemic period, when general health was threatened by engagement in public activities and unemployment markedly increased, one would expect a decline in expenditures for food away from home and an increase in expenditures for food at home.

To assess the magnitude of these changes, this section examines how the composition of spending on food changed in the COVID-19 era. In addition, this section reveals other changes in food spending patterns, undoubtedly related to the pandemic, that are apparent in the CE data.

With the onset of the COVID-19 pandemic in 2020, total food expenditures fell, before recovering and surpassing 2019 levels in 2021. The components tell the story. Note that expenditures for food at home climbed 6.5 percent on average each year from 2019 to 2021. Concurrently, food away from home plummeted 32.6 percent in 2020, before recovering modestly in 2021, up 27.6 percent (table A). Undoubtedly, the 2020 figures can be explained as reactions to the pandemic.

Between state and local government mandates forcing many restaurants to close for varying periods in 2020 and increased consumer caution in response to the pandemic, consumers substituted food away from home with food at home throughout that year. Interestingly, as mandates began to recede, 2021 saw increases in both food away from home and food at home. The recovery in food away from home in 2021 is not surprising. In order to meet the emerging market of consumers with isolation fatigue, many restaurants—even high-end establishments—started offering delivery, curbside pickup, and other options that did not exist before the pandemic. Yet despite the growing number of social-distanced food away from home options, food at home expenditures increased as well. The reason does not appear to be price change. The CPI shows that prices for food at home increased 3.5 percent in both 2020 and 2021, compared with the 6.4-percent increase in expenditures in each year. At the same time, the CPI for food away from home increased 4.5 percent in 2020 and 2021. These changes affected the allocation of the total food dollar, as shown in chart 4.

Note that food away from home expenditures accounted for more than 43.2 percent of food expenditures in 2019, plunging to 32.5 percent in 2020, and recovering to just over 36.5 percent in 2021. (See chart 5.)

Once again, with restaurants initially closed in 2020, and consumers exercising prolonged caution, it is not surprising that the frequency of food away from home purchases declined in this year. In 2021, many restaurants reopened, but the Omicron and Delta COVID-19 variants were likely to be responsible for the lack of full recovery in food away from home expenditures in 2021.

Interestingly, food at home expenditures exhibited the same pattern as food away from home. The answer is likely stocking behavior. That is, consumers likely made fewer trips to the grocery store, but purchased food in bulk on these trips. Consumers who typically shopped once a week might have switched to biweekly or even monthly shopping trips.

Finally, these changes in food expenditure—at the total and component level—affected the allocation of total expenditures. In the pre-COVID-19 pandemic period (2019), food away from home represented roughly 43 percent of total food spending, or 5.6 percent of total expenditures in both 2018 and 2019 (chart 4). As expected, with the onset of the COVID-19 pandemic in 2020, consumers shifted toward purchasing food at home, most likely because of government mandated shutdowns of restaurants and similar venues reduced seating capacity, and to comply with social distancing recommendations and pandemic-related health concerns.

As a result, in 2020, food at home accounted for 67.5 percent of total food spending. The next year, 2021, saw a gradual return to the 2019 allocations to food spending at and away from home. Food at home declined to 7.9 percent and food away from home reached 4.5 percent of total expenditures. Shares of total expenditures for food at home remain 0.5 percentage points higher than its 2019 level and food away from home remains 1.1 percentage points less than its 2019 level (chart 4). Multiple variables can potentially account for this. As noted above, while food prices at home did not rise as much as food prices away from home, CPI data show that food at home prices rose by 3.5 percent from 2020 to 2021. Furthermore, those most at risk for COVID-19 might still have been hesitant to dine outside the home and thus may have remained on the sidelines from the restaurant scene. (See chart 4.)

According to results of the Diary Survey, percent reporting changed within these categories (table D). Note that 93 percent of consumer units reported a weekly food expenditure of some kind in 2019. This fell to 89 percent in 2020 and rose to 91 percent in 2021. Again, the components are revealing, and follow the same pattern; percent reporting fell in 2020 and recovered partially, in 2021. This pattern is most evident for food away from home; percent reporting fell from 74 to 60 percent, then rose to 65 percent.⁸

Housing 

Like food, housing is largely a dichotomous topic. People must decide whether they want to rent or own their dwelling. Their choice is, among many other factors, influenced by prevailing interest rates for a mortgage and the overall level of housing prices. The onset of the pandemic had a strong impact on economic activity and behavior, heavily influencing the housing market and, by extension, a CU’s decision to rent or buy.

Renting vs. homeownership

After rising for 2 of the last 3 years and recording a 2-percent rise at the beginning of the COVID-19 pandemic, homeownership rates slightly declined to 65 percent in 2021 (chart 6). This marks the first reduction in homeownership rates since 2015, when homeownership rates dropped to 62 percent, the lower bound of the 17-year time series from 2004 to 2021. The corresponding rental rate rose to 35 percent in 2021, returning to its average for the time series. Much of this can be explained by the movements of mortgage interest rates.

In the beginning of 2021, interest rates on 30-year mortgages remained high, yet, as the year progressed, interest rates began to fall. As mortgage rates decreased, the gap between the number of potential homebuyers and the number of houses supplied grew. Due to this imbalance, there was a shortage of owned homes available for first time buyers, crowding them out and pushing the youngest CUs into the rental market.

Average annual shelter prices rose 2.7 percent from 2020 to 2021, according to CPI data. As noted in the 2020 CE Annual Report, a change in data collection methodology may have contributed to the rise in homeownership status in that year.⁹

Homeownership and rent spending by region

Among the major spending categories, housing remains the single largest component. Housing is generally thought of in terms of geographic region. In the CE, the United States has four regions: Northeast, South, Midwest, and West.¹⁰ Examining rent spending by region can elicit some interesting comparisons: for example, are there more CUs renting in the Northeast than the West? Region itself is a broad metric and it might not pick up subtle differences that can be explained on a state or even metropolitan statistical area (MSA) level.

In general, housing expenditures increased 5.6 percent from 2020 to 2021, following a 3.5-percent increase from 2019 to 2020 (table A). Even though housing expenditures increased, the shares of housing expenditures decreased by 1.1 percent to 33.8 percent. Yet, despite this decrease, 2021 shares remain 1.0 percentage point higher when compared with 2019 levels (table B). The overall homeownership rate decreased by 1.0 percentage point to 65.0 percent in 2021, following a 2.0-percentage-point increase from 2019. (See chart 6.)

In each of the four regions of the United States, the homeownership rate increased from 2019 to 2020. However, each region differed slightly from 2020 to 2021. The Northeast was the only region to show growth in homeownership rates at 1.0 percentage point. The Midwest had the highest homeownership rate, which remained stable at 70.0 percent (chart 7A). The South and West experienced similar declines; as homeownership rates fell (and, therefore, rental rates rose) in 2021, the homeownership rate in the South remained 2.0 percentage points above its 2019 level. In contrast, the West, which already had the lowest homeownership of the four regions, was the only region in which 2021 homeownership rates fell below 2019 levels.

Homeownership rates in the West fell from 61.0 percent in 2020 to 58.0 percent in 2021. Trends of homeownership in the West are consistent with a past study of homeownership rates, where it corroborated this deviation from trend in the West.¹¹ The converse nature of homeownership and rental rates means that the West had the highest proportion of renters to homeowners in 2021. It should be noted that this analysis focuses on the short term: 2019 to 2021.

To analyze the homeownership dynamics in the western United States, it is important to consider its major population centers. The most populous state in the West and in the broader United States is California, with the three most populous cities in the state being Los Angeles, San Francisco, and San Diego. Data variations in the West can, in theory, be explained by movements of these three cities. At the MSA level, the homeownership rates for San Diego and Los Angeles declined 6.0 and 2.0 percentage points in the 2018–19 collection period. Associated rebounds of 4.0, 7.0, and 8.0 percentage points for Los Angeles, San Francisco, and San Diego, respectively, were observed in the following collection period of 2020–21. That runs counter to the directional trends in the broader West (chart 7B). Some further mining found gold in Phoenix, AZ and Honolulu, HI. Over the same collection period, homeownership rates rose sharply in 2016–17 and 2018–19 before plunging 9.0 and 6.0 percentage points, respectively, mirroring the trend in chart 7A (chart 7C). MSA data are represented in multi-year tables with 2-year collection periods as opposed to single-year collection periods in detailed level tables because of data limitations.

Apparel spending by size of consumer unit

Average annual expenditures in apparel and services increased by 22.3 percent in 2021 (to $1,754) compared with a 23.8-percent drop in 2020 (to $1,434) and yet remained lower than in 2019 ($1,883).¹² (See table A.) Within the apparel and services category, the biggest increase in a major component, 48.6 percent, occurred in the other apparel products and services expenditure category. This increase is attributable to a 119.4-percent increase in the subcategory of jewelry expenditures, rising from an increase in wedding bookings and other formal functions. Expenditures for general apparel items exhibited increases that were closer to the overall average increase: 32.6 percent for boys ages 2 to 15, 29.2 percent for men ages 16 and over, and 20.4 percent for women ages 16 and over. Footwear expenditures increased by 7 percent in 2021, mainly because of a 125-percent jump in boys’ footwear. Interestingly, women’s footwear decreased by 11.6 percent during the same period. Children under the age of 2 was the only age group to experience a decrease in apparel expenditures, at 2.9 percent. Despite this decrease in total apparel and service expenditures, for the category of boys and girls from 2 years to 15 years of age, expenditures in 2021 were higher than in 2019. The gradual return to in-person learning for children might explain this trend.

Although expenditures on apparel were still below pre-COVID spending, apparel spending increases in 2021 were consistent across CUs of all sizes. (See chart 8.) Percentage increases in spending by size of the CU ranged from 8.8 percent for four-person CUs to 57.4 percent for three-person CUs. While small CUs (one or two persons) had increases in expenditures at the smaller end of the range (about 11 percent each), for the largest CUs (five or more persons) expenditures rose 46.9 percent as lockdown and pandemic restrictions lifted. This contrasts to decreases for all CU sizes in 2020.

New and used vehicles by highest educational attainment of consumer unit

The purchase of a vehicle is one of the largest made by a CU. As stated earlier, according to the CPI, average prices for new and used cars and trucks were up 5.9 and 26.6 percent, respectively, from 2020 to 2021. (See the Effects of inflation and supply chain disruptions in 2021 section.) These inflated prices have only been exacerbated the last 2 years by the ongoing semiconductor and microchip shortage.¹³ New cars have 150+ chips contained inside them, and with a limited supply of microchips being imported fewer, new automobiles can hit the market.¹⁴ This reduced supply is likely one of the many reasons that new cars were even more expensive. If CUs view new and used automobiles as substitutes, this reduction in supply for new cars raises demand for used cars. According to detailed level tables, new and used vehicle spending rose 5.8 and 8.3 percent, respectively.

Despite the increase in overall spending on new and used cars, it is worth noting that the level of expenditure is not uniform across subgroups. For instance, vehicle purchases vary by CU’s highest education attainment. Education subgroups have wide variation in income, occupation, and other demographics.

With reduced supply in the new vehicle market, expectations would dictate higher prices and thus mean higher quarterly expenditures for vehicles among all education groups. Chart 9A shows mean quarterly expenditures for CUs who purchased at least one new car or truck by highest education level within the respective consumer unit.¹⁵ The trend of yearly expenditure increases holds true for all the subgroups except for the less than high school graduate group. Several factors are likely to cause swings in mean quarterly expenditures on new cars for those in this subgroup.

The total number of CUs in the less than high school graduate subgroup is far below that of all other education subgroups. Only 7.9 of the total 133.6 million CUs occupy it, roughly half as many as the next smallest share, associate's degree graduates. Moreover, percent reporting in 2021 is the lowest and most volatile of this 2019–21 period, so any swing in percent reporting will have a more profound effect on price paid. (Detailed level interview tables that include percent reporting are available upon request; see the technical notes for more information.)

For those with at least a high school degree, the mean quarterly expenditure for a new car or truck rose gradually from 2019 to 2021. Prices paid in 2021 hovered between $37,075 and $42,607, respectively, reflecting the negative supply shock. Mean quarterly expenditures jumped from 2020 to 2021. Bachelor’s degree holders experienced the strongest increase and levels were elevated for master’s, professional, and doctoral degrees, too. Average annual incomes of over $100,000, which are generally associated with higher levels of education obtainment, allow for the purchase of more luxury vehicles, pushing up the mean quarterly expenditure. (Income levels can be found in the Calendar year Tables by Education.) 

With new cars and trucks in shorter supply, for those who had to or wanted to purchase a vehicle, this incentivized substitution to the used car market. Among the six education subgroups, three saw upticks in percent reporting for used vehicles: high school, less than high school graduates, and bachelor’s degree holders (table F). This uptick in reporting the purchase of an automobile could be tied to the fact that positions with an education obtainment of at most a bachelor’s degree were more likely to be deemed “essential workers.”¹⁶ Alternatively, people with at most a bachelor’s degree could have put additional wear on their cars by working part-time as drivers in the rapidly growing food delivery app industry, made popular by the pandemic. Master’s, professional, and doctoral degree holders had the highest mean quarterly expenditure for used cars and trucks of $21,033, roughly $3,055 more than the next closest group of associate's holders at $17,978 (chart 9B). CUs in this subgroup have higher income levels, allowing them to absorb higher prices more easily or more likely to purchase multiple cars for the purpose of leisure, thus driving up expenditures.

Gasoline spending

As Americans adjusted to the ongoing pandemic, 2021 should have been the year in which consumers hit the open road en masse, filling up their cars, trucks, and SUVs with great frequency. This could be to drive to the office (given the gradual return of in-person office work) or to take the family on that 1-year delayed road trip. What most consumers likely did not anticipate was the surge in gasoline prices from the half-decade low of $2.24 per gallon seen in 2020 to a half-decade high of $3.13, as the CPI data show. (See chart 10A.) With higher driving demand and higher gasoline prices, gasoline spending and prices rose 29.1 and 36.0 percent in 2021, respectively, as measured by CE and the CPI. (See chart 10B.)

Just like any other good or service, two factors determine total expenditures for gasoline: the price of the good and the quantity purchased. All else equal, any change in gasoline prices will directly affect the resulting annual gasoline expenditure for a given year. To illustrate this idea, imagine a basic equation where total gasoline expenditures of G is a function of the annual price paid by consumers of P, multiplied by the annual quantity of gallons purchased of Q. That is, G=P × Q. Strictly based off chart 10B, it is not certain whether this rise in expenditures is a result of changes in price or quantity purchased.

Price elasticity of demand is a measure of how much consumers change the amount of a good they buy when the price of that good changes. Price elasticity of demand can be influenced by factors such as the percentage of total expenditures for which a good (gasoline in this case) accounts, how many close substitutes exist for the good, and whether the prices of the substitutes for the good of interest are higher or lower than the new price of the good of interest. For instance, if the price of gasoline were to get too high, if people see that it is cheaper for them to take alternative modes of transportation (like public transportation or use ride-sharing apps), they may substitute gasoline for one of those modes of transportation instead. Price elasticity of demand in this case is how much less gasoline people buy when it becomes more expensive.

Regardless of reason, both prices and quantities can drive spending behavior. How much expenditures are affected by each depends on the magnitude of each respective change. Price can rise, quantity consumed can fall, and expenditures can still rise if the percent price increase is larger than the percent quantity decrease. This also works in the reverse fashion; prices can fall, and expenditures rise, when the percent increase in quantity purchased is larger than the percent decrease in prices. Regardless, this was not the case in 2021, where it appears that prices increased, and quantities purchased declined slightly (indicating noticeable price inelasticity of gasoline with respect to price).

To analyze this concept graphically, chart 10A shows annual gasoline prices and weekly gallons of gasoline purchased. Weekly quantity of gallons of gasoline are computed by first taking CE estimates for total gasoline expenditures, dividing that value by average price data for gasoline from the CPI, and then dividing by 52 to get a weekly estimate. Presenting quantity in a weekly figure reflects the frequency of which consumers fill their tanks and how consumers typically frame gasoline spending: on a weekly and not annual basis. In addition, note that BLS generates price indexes and average price estimates strictly for urban consumers. Therefore, charts 10A and 10B include expenditure data only from urban consumers. Furthermore, CPI average price estimates strictly capture gasoline and not motor oil or other fuel prices. Estimates in published CE tables capture motor oil and other fuels. Therefore, CE gasoline data are extracted from the detailed level type of area tables (unpublished, but available on request) described in the technical notes section of the report. (See section titled, “Detailed tables, 1984–21.”)

Analyzing charts 10A and 10B together provides the clearest picture for gasoline expenditure trends from 2008, the first year of the most recent recession before COVID-19, to 2021. The components of chart 10A influence chart 10B. From 2020 to 2021, prices and expenditures rose at a close 36.0 and 29.1 percent, respectively. (See chart 10B.) Weekly quantity purchased fell slightly by roughly nine tenths of a gallon per week (0.93 gallons). As stated, prices displayed are for urban areas only and some of said urban areas experienced higher prices relative to others.

Thus, some consumers, potentially on the lower end of the income distribution, would not have been able to maintain quantities purchased once prices rose. That is, such consumers might reduce miles driven each week, and therefore gasoline purchases, accordingly. Couple this with many companies keeping telework policies in place through much of 2021, and the conditions were present for fewer weekly gallons purchased.

While expenditures on gasoline and the price of gasoline usually follow similar patterns, nearly identical concurrent movement in levels had not been seen since 2012 and 2009. In the 2008-–09 price change, when the United States was in a recessionary period (which the National Bureau of Economic Research (NBER) denotes as having occurred from December of 2007 through June 2009), expenditures and prices fell 26.8 and 26.9 percent, respectively.¹⁷ In 2012, gasoline saw concurrent falls in prices and expenditures of 3.3 and 3.9 percent, respectively.

Healthcare spending by age

Based on the human lifecycle, it would be reasonable to expect that healthcare expenditures are both related to, and increase with, a person’s age. That is, younger people generally need less care, and may allocate most of their health care dollars to preventative care and occasional acute needs (such as the sudden onset of a temporary illness). Older consumers are more likely to need more costly and extensive care, medical equipment, prescription drugs, and other healthcare goods and services to maintain quality of life. Analyzing healthcare spending among the age groups can show whether this theoretical relationship exists in the data from 2020 to 2021.

All age groups spent more on healthcare in 2021 than in 2020. This change was driven by double digit increased spending in the medical services subcategory for all age groups except two: those 45–54 years old and those 55–64 years old. CUs with reference persons ages 45–54 had the highest increase in expenditures in the drugs subcategory whereas CUs with reference persons ages 25–34 had the greatest increase in medical supplies spending, but experienced declines in drug spending. Overall, the largest changes in healthcare spending were in the medical services subcategory for those 35–44 years old (62.2 percent) and under 25 (58.3 percent). Increased spending in medical services could be driven by the opening of elective surgeries that were in large part suspended in 2020. Elective and pandemic-related medical services together could have worked in tandem to boost medical services spending.

Health insurance spending increased for each group 45 years and over but decreased for each age group under 45 years old. The largest decrease was 12.1 percent by the under 25 age group. Spending on medical services increased for every age group in 2021, though the smallest increase was 3.2 percent by those 45–54 years old. Spending on drugs fell in two groups: 25–34 years old (6.5 percent) and 65–74 years old (1.3 percent). The largest increase in spending on drugs was by those 45–54 years old, rising 15.3 percent. Spending on medical supplies declined for the under 25 age group and those 75 and older. The largest increase in medical supplies spending in 2021 was by those 25–34 years old, who spent 39.4 percent more than the previous year (chart 11). The biggest component of medical supplies, eyeglasses, increased by 17.6 percent. (See detailed level tables, available by request.)

Entertainment spending by age and income

In 2021, the rate of increase in entertainment expenditures for the average CU (22.7 percent) outpaced the rate of increase in total expenditures (9.1 percent). In contrast, in 2020, the first year of the pandemic, entertainment expenditures (-5.9 percent) fell more steeply than total expenditures (-2.7 percent). (See table A.) The 2021 growth in entertainment expenditures was driven by increases in the subcategories of other supplies, equipment, and services; and fees and admissions (a category that includes recreational vehicles and campers, motorized boats, and sports equipment). (See detailed level tables for a breakdown of each category.)

In 2021, expenditures in the fees and admissions category as well as in other supplies, equipment, and services grew by 53.9 and 59.8 percentage points, respectively. The entertainment categories of pets; audio and visual equipment and services; and toys, hobbies, and playground equipment increased steadily across the timeseries. This increase persisted in the 2020 pandemic and 2021 post-pandemic recovery period (chart 12A).¹⁸

Entertainment expenditures differed greatly by age group in 2021. CUs with reference persons ages 45–54 had the highest levels of, and largest increase in, expenditures in 2021. Levels of expenditures ranged from $1,700 for CUs with reference persons under 25 to $4,695 for CUs with reference persons ages 45-54. In contrast, levels of expenditures in 2020 ranged from $1,266 for CUs with reference persons under age 25 to $3,628 for CUs with reference persons ages 35–44. However, CUs with respondents ages 45-54 increased the most, by 47.8 percent. In 2020, this was also the age group whose expenditures fell the most (17.7 percent) (chart 12B).

As noted above, other supplies, equipment, and services grew at a higher rate relative to all other entertainment components, at 59.8 percent annually from 2020 to 2021. This warranted further data exploration. It raised the question, could there be an underlying shift by income level in the other supplies, equipment, and services subcategory?

Those CUs making $200,000 and above spent large sums of income on the purchase of motorized recreational vehicles, pushing up total spending in this subcategory (table H). In 2020, respondents in this income group spent an average of $1,527 on motorized vehicles, more than all the other groups’ average expenditures on this category combined. The income group with the next largest expenditure on motorized recreational vehicles, respondents earning $150,000 to $199,999, spent less than a third in the same category, an average of $387. (See table G.)

In 2021, when asked how much they spent on motorized recreational vehicles in the last year, CU's making over $200,000 averaged $2,385 in expenditures, continuing to outspend all other income groups.

The 2021 increase in expenditures for the highest income group on motorized recreational vehicles amounts to a 56.2 percent increase in spending from the previous year. (See table I.) While this increase may not seem significant given the large percent changes seen in the other income groups’ expenditures in the motorized recreational vehicles category, it is a rather large increase. The 56.2-percent increase amounted to an increase of $858.50, greater than the increases in this category for all the other income groups combined. Thus, while the expenditures in this category of some of the other groups may have more than tripled, the other groups’ expenditures in this category were still far less.

Travel expenditures

With the onset of the COVID-19 pandemic, expenditures allocated to out-of-town trips declined by 56 percent in 2020, falling from $2,100 to $926 (table J). Despite a rise of 95 percent in 2021 to $1,803, they were still 14 percent lower in 2021 than in 2019. At the height of the COVID-19 pandemic, in 2020, four of the five major components of spending on out-of-town trips (food, alcohol, lodging, and entertainment) declined between 49 and 54 percent. However, the transportation component was the hardest hit, falling 65 percent in 2020. Similarly, transportation on out-of-town trips recovered least in 2021, with expenditures ($597) 30 percent lower in that year than in 2019. (See detailed level tables for spending on components of travel expenditures.) Expenditures for the remaining subcategories remained 2 to 7 percent lower in 2021 than in 2019. The exception was entertainment on trips, for which expenditures were 2.4 percent higher in 2021 than in 2019.

Regardless, the allocation of dollars spent within the travel category varied little, despite the pandemic in 2020 and 2021. The two exceptions were two subcategories: lodging and transportation (table J). In 2019, lodging accounted for about 3 in 10 travel dollars spent, while transportation accounted for about 4 in 10 travel dollars spent. In 2020, the share for lodging rose, while the share for transportation fell, with both categories accounting for about 1 in 3 travel dollars. In 2021, this allocation was nearly unchanged.

Income quintile

Table K and charts 13A and 13B illustrate how expenditures for out-of-town trips relate to annual income before, during, and after the onset of the COVID-19 pandemic. Regardless of period, one would expect expenditures for out-of-town trips to be strongly related to income, with the highest income groups spending the most. Nevertheless, it is interesting to see how the pandemic affected these expenditures for each income quintile. For example, just because the highest income group had the most ability to afford travel does not mean they chose to travel during a pandemic, when doing so required more thought than just considering the potential strain on a budget.

Intriguingly, at least in percentage terms, spending declined at about the same rate in 2020 regardless of quintile; between 54.4 and 59.6 percent. Within this narrow range, the highest two quintiles experienced the smallest declines: 54.4 percent by the fourth and 55.3 percent by the fifth quintile. Though not by much, the largest decline of 59.6 percent was for the second quintile, with the first and third nearly tied at about 57 percent each (chart 13B).

The rebound pattern of 2021 was quite different, with the largest increase (128 percent) for the third quintile, and with the percentages tapering by quintile in the lower direction but increasing in the higher direction. That is, the increase for the second quintile was 103 percent, while the first quintile exhibited an increase of 74 percent, the smallest of any quintile. In contrast, the increase for the fourth quintile (82 percent) was smaller than both that for the third, and that for the fifth (92 percent).