Share of Income Spent on Food in the U.S. Drops - A New Historic Low

During the Coronavirus (COVID-19) pandemic and economic recession in 2020, the share of U.S. consumers' disposable personal income (DPI) spent on food decreased from 10.1 percent the previous year to 8.62 percent, the lowest in the past 60 years. DPI is the amount of money that U.S. consumers have left to spend or save after paying taxes.

The share of DPI spent on food in the United States was relatively steady over the last 20 years, decreasing from 9.95 percent in 2000 to 9.58 percent in 2019. Consumers spent 1.4 percent more of their incomes on food at supermarkets, convenience stores, warehouse club stores, supercenters, and other retailers (food at home) from 2019 to 2020, while they spent 22.2 percent less of their incomes on food at restaurants, fast-food places, schools, and other places offering food away from home over the same period.

Changes in the shares of income spent on food in 2020 resulted, in part, from pandemic-related closures and restrictions at food-away-from-home establishments, as well as from the largest annual DPI increase in 20 years. The increase in DPI was driven by additional government assistance to individuals in 2020, including stimulus payments to households and increased unemployment insurance benefits.

USDA’s Economic Research Service's Food Expenditure Series data product.

EDITOR’S TAKE:

As we learn to adapt to the ongoing COVID pandemic and people return to their previous food purchasing patterns by eating out more and government assistance subsides, it is likely that history will show this data to be an anomaly. In addition, with inflation hitting consumers hard, especially for food and gas purchases, the percentage spent on food is likely to return to more historical levels, or even higher. So, while this sounds like good news, it is probably short lived. And, let’s face it, as the article states, DPI is the amount of money people have left to spend or save after paying taxes. If expenditures on food rise again, as we expect they will, the general public will have less to spend on other purchases like cars and houses since real wages are decreasing. However, as we have been reporting, farmers and ranchers have benefitted from higher commodity prices and several very successful years financially.

That, once again, leads us back to the concept of “Look Beyond Your Lot”. Who will be your best customer prospects in the next six, nine, twelve months and beyond? Need we say it again? Ok – we think farmers/ranchers will be your best customers moving forward!