Are you curious to know how Americans spend their money over the decades?

I think it’s fair to say that you can learn a lot about someone by analyzing how they spend their money. If the person in question is rich or poor, where do they usually shop, and what’s the real value of their money?

These are all valid questions. Also, it’s worth noting that the United States economy doesn’t really come with a receipt. As far as we know, GDP tells us how much stuff we actually produce, while GDI, also known as gross domestic income, tells us how much money we actually make.

However, these numbers don’t really tell us what the economy looks like from the viewpoint of the average household. Luckily, a recent report from the Bureau of Labor Statistics brought light into the matter, with its focus on “100 Years of U.S. Consumer Spending.”

Gotta check those capitalist numbers every now and then, right? So, we’d like to discuss how spending on food and clothing slowly went from half the family budget in 1900 to less than a fifth in 2000.

The numbers are impressive, and so are the conclusions we can draw from them. At the end, you might get the same feeling as we did: we’re a nation that fundamentally feels poor, but it isn’t.

Here are some of the biggest notes pointing out the share of family spending per category over the 20th century. The main idea is that spending on food and clothes has drastically fallen, while housing and services went all the way up.

How we spent the 1900s

Ok, let’s backtrack a little bit. It’s 1900, and the United States is a completely different country than anything we know nowadays. We are getting closer to the end of the millennium, but in the “warp and woof of life,” we are living closer to the 1600s than the 2000s.

Only a quarter of households have running water, and even fewer people actually own the homes they live in. But that’s not all; even fewer have flush toilets.

Only one-twelfth of households use gas or electric lights, one-twentieth have telephones, and one-in-ninety have their own car. On top of that, no one owns a television.

So the question is: What are we actually spending all that money on? Well, the vast majority of our income goes to the places we work, whether we’re talking about farms, textile mills, or even the house.

The average household haul in 1901 was around $750. Families spend a shocking 80% of that amount on food, clothes, and homes.

Yes, in the 1900s, as seen in the study conducted by the Bureau of Labor Statistics, which focuses on national jobs, income, and spending, the United States was genuinely one big farm surrounded by a bunch of smaller factories.

At this point, almost half of the country works in agriculture. Moreover, when it comes to the budding services economy, there are increasingly more household servants than sales workers.

And if you’re wondering what’s up with the women’s rights movement, over twice as many households report income from children (22%) than wives (9%).

Over the next 100 years, the United States family got increasingly smaller, more reliant on working women and computers, and less reliant on working kids and farms.

But above everything, it is much richer. Just to get a better idea of exactly how rich we are, we’re talking 68 times richer. Household income doubled no less than six times in the 20th century, or once every decade and a half. Let’s see how things went halfway through the century.

How We Spent Over the 1950s

It’s 1950, and compared to five decades earlier, the United States is, again, a very different country. The population doubled to 150 million, and the economy’s share, especially of the farmers, has drastically fallen to 10%, and it’s all due to the mechanization of the farm, represented by the mighty tractor.

At the same time, food has gotten much cheaper compared to wages, and its share of the family budget has drastically declined from 43% to 30%.

In the meantime, the “making-stuff” economy is peaking. Half of the working men are either craftsmen or operators. And if you’re wondering what the female labor participation rate is, it’s still quite low—below 20%. Factory wages have drastically increased by sevenfold since 1901, and they’ve almost tripled since the Great Depression.

Also, textile manufacturing has never been higher, and it will never reach those levels ever again. Apparel manufacturing will also develop through the 1970s before fully collapsing in the last third of the decade.

The United States was, for a brief moment, the making-stuff capital of the entire world, and the dominance must have been indefinite.

How we spent in 2003

It was increasingly fashionable to consider the 1950s as the golden age of our economic history. After all, employment was full, wages were still rising, and manufacturing was going strong.

If you were the type of person who likes clothes or food, then you were basically living in paradise. Well, in the last 50 years, food and apparel’s share of the family has drastically fallen from 42% to 17% (and you have to remember that we were close to 60% back in the 1900s).

If you’re wondering how these numbers dropped like this, it’s simple: we managed to find cheaper ways to eat and clothe ourselves. Food production became more efficient, and we offshored clothing manufacturing to other countries that had cheaper labor. Because of that, apparel’s share of the pie drastically shrank in the second half of the century, by two-thirds.

Then what’s missing?

The natural question that comes to mind is: if the typical American family feels squeezed, what is it exactly that squeezes us? Well, there are two answers to that.

First, we need to take into account housing and cars. Then, we have transportation costs, which mainly refer to cars, gas, and public transit. A century ago, if you remember, no less than 80% of families were renters.

No one owned a car. But now? More than 60% of families are homeowners, and every household has at least one car.

The other thing, which we haven’t mentioned yet, is health care. Oh yes, the big monster. Health-care spending makes up more than 16% of our economy, but only 6% of family spending, according to the CES.

One of the reasons for this gap is that the vast majority of medical spending isn’t really out of our pockets. Employers pay workers’ premiums, and the government pays the bill for the elderly and those with low incomes. And here’s another thing you might not have known: government spending on Social Security, Medicare, and Medicaid has quadrupled since the 1950s in probably the most meaningful way.

In other words, health care costs are slowly but surely squeezing Americans. However, the details of this squeeze elude the color wheel above. We are also paying for health care with more taxes, borrowing, and compensation that transfer to more health benefits, not necessarily wages.

The 100-year squeeze

Back in 1900, the Bureau of Labor Statistics counted no less than three categories as high necessities: housing, food, and apparel. Well, in the last 100 years, we have added more to the list.

As I mentioned before, health care is more important than ever. For the majority of people, a car is also a necessity. Even higher education is now seen as a necessity, especially for middle-class people.

If you want to read more on the matter, you definitely need to read this too: History of American Economy (MindTap Course List).

If you found this article interesting, we also recommend reading: Don’t Let Inflation Drain Your Wallet – Follow These 9 Tips!