Consumer spending consistently accounts for about 70% of the U.S. economy. What Americans buy with all of that consumption is divided into two major categories: First, there's non-discretionary spending on necessities such as food, medicine, housing, and clothing. Second, there's discretionary spending, which includes all non-essential goods and services.

America's buying habits have been well documented. As of the 1st quarter of 2020, consumer expenditures in the U.S. was $14.5 trillion.

The data provides a reasonably accurate picture of the nation's amusements and entertainment, it's interests, hobbies, indulgences and vices. Below, is a list of the top ten discretionary purchases of goods and services by category. The percentages cited below are based on an average American household income of $78,635 for 2018.

Key Takeaways

  • Consumer spending is refers to all consumption final goods and services for current personal and household use, and includes both necessities and discretionary purchases.
  • Consumer spending, on whole, is more than $13 trillion, making up around 70% of the American GDP.
  • Here, we take a look at how government statistics say Americans spend their money.

Apparel Products and Services

Dry cleaning, storage of clothing, rental of clothing, jewelry and watch repair are included in this category. Total Purchases: 3%.

Tobacco

Despite the well-known health hazards of smoking and chewing tobacco, Americans continue to use tobacco products, although smoking in general has been trending lower. At the same time, however, vaping and related products have seen an uptick. Total Purchases: 0.6%.

For more, see: Paying Uncle Sam: From Tobacco to $1 Trillion

Entertainment Equipment and Services

This is a broad category that includes sports equipment, photographic equipment and supplies, hunting and fishing equipment, bikes, boats, balls and other sports equipment. Total Purchases: 8.1%.

Alcohol

Every variety of alcoholic beverage, including straight and mixed drinks, beer and wine are included in this category. Most of these beverages are consumed at home, according to the data. Total Purchases: 1%.

Fees and Admissions

Americans love movies, musical concerts and sports events, and spent more in this category than they spent on goods and services for personal care. Total Purchases: 1.3%.

Vacation Lodging

The more income per household, the more is spent on hotels, motels, vacation homes and lodging for weekend getaways, or for longer vacations. Total Purchases: 1.4%.

Hobbies, Toys, Pets and Playground Equipment

This is a catch-all category, with the majority of the money spent going for pets - their food and veterinary care. Total Purchases: 1.4%.

Television, Radio and Sound Equipment

Also included in this category are video games (hardware and software), cable TV connections, and DVD and CD players. Total Purchases: 2%.

Gifts

Americans are a generous people, and this virtue - or extravagance - is illustrated in the amount they spend annually on gifts. Total Purchases: 2.2%.

Food, Not Consumed at Home

Eating out, including fast food and traditional restaurants, and leisurely venues, account for a larger percentage of meals not consumed at home. This category also includes food obtained from vending machines, mobile food vendors and delivery services. Total Purchases: 5.6%.

Non-Discretionary Consumption

Some essential purchases for the same period included the following:


Expenses

Total Purchases (%)

Doctors and Dentists

3.0%

Groceries

8.6%

Hospitals and Nursing Homes

1.7%

Rent or Mortgage

31.5%

Utilities

5.3%

The Bottom Line

Consumer spending and the U.S. economy go hand in hand. When one increases, so does the other. What Americans buy and what percentage of their purchases are spent on non-essentials reflects their interests, habits and vices. What America buys, therefore, is an economic self-portrait of the average American consumer.