From Home Furnishing Business
Statistically Speaking: Consumer Spending Today: Healthcare and Homes
Although Healthcare spending still leads the way, durable goods, including Furniture and Home Furnishings products, have steadily increased their share of post-recession consumer dollars since 2009. This is despite the fact that last year for the first time Americans spent more money on health care than the total amount spent on living in and taking care of their homes -- $2.95 trillion versus $2.91 trillion. Housing expenditures grew 4 percent last year and include rents, mortgage payments, utilities, housing maintenance, all household and outdoor furnishings, tools and equipment but excludes cell phone, internet, cable, and telephone services. Meanwhile, spending for heathcare grew 5.6 percent and includes all out-of-pocket costs for health insurance, physicians, hospitals, outpatient facilities, nursing homes, etc. as well as prescription and non prescription drugs and medical equipment.
After a gradual post-recession recovery, consumer spending continues to grow an average of 3.8 percent a year since 2009. According to the Bureau of Labor Statistics’ Personal Expenditures Survey, Consumer Spending by U.S. Households totaled $12.76 trillion last year – increasing 3.9 percent from 2015. At a seasonally adjusted annual rate, the first quarter of this year slowed 2.7 percent to $13.11 trillion. This article picks up from Statistically Speaking’s August 2015 article Where are Consumer’s Spending Their Money.
Growth of Durable Goods
Between 2000 and 2009, consumer expenditures for services surged as durable goods lost ground during the Great Recession. However, since the recession’s end in 2009, spending for durable goods has seen the largest increase with nondurables declining as a percent of total consumption. Durable goods now comprise 67.8 percent of consumer expenditures (2017 Q1 Annualized) compared to 63.9 percent in 2009 (Table A).
As shown in Table B, both durable goods and nondurable goods lost tremendous ground from 2000 to 2009 as spending on services skyrocketed by 53.2 percent while consumer spending on housing and healthcare services steadily increased. On a positive note, in the years following the recession (2009 to 2017Q1), durable goods have surged growing 40.6 percent compared to 27.8 percent for nondurables and 33.7 percent for services.
Top Consumer Spending
With healthcare last year finally exceeding total housing expenditures, including furnishings and maintenance, the trend is on track to continue this year. Total combined housing and home furnishings expenditures lost 1 point share of all spending since 2009, mainly through declining utility expenses and slow to recover rents early in the recovery. Home furnishings products have generally held consumer spending share with the exception appliances and televisions. Meanwhile healthcare has increased its share 1.5 points in the same time period – up to 22.5 percent of total spending the first quarter of this year. Total consumer dollars spent on housing and furnishings trailed closely at 21.6 percent in 2017 Q1. Meanwhile Americans are eating out more, with corresponding spending on food consumed at home declining. Table C compares the share of consumer spending 2009 to 2017 Q1 by various goods and services. Itemized categories exceed three percent of spending.
Rents and mortgage payments make up 73 percent of consumer spending on housing, while the biggest chunk of healthcare was paid to hospitals (7.9%) and outpatient services (7.8%). Actual medical health insurance totaled 1.3 percent of consumer spending.
Housing and Household Expenditures
Since the end of the 2009 Recession, household insurance has surged as the fasted growing housing expense – up 67.8 percent but tapering off over last year (Table D). Both furniture and home Furnishings have maintained a steady upward trajectory – averaging 3.5 percent and 3.7 growth each year, but still lag slightly behind overall consumer spending growth of 3.8 percent. Televisions and appliances have been outpaced by other household spending. Household utilities have stabilized with little increase.
As Americans are staying put longer, household maintenance spending has grown 29.2 percent over the last five years. Last year, rents and mortgages saw a high growth of 4.7 percent as supply tightened in many areas. Consumer spending slowed during the first quarter of this year in all household spending categories, except televisions/video and audio. Figure 1 itemizes the growth of the housing and home furnishings expenditures five years, one year and 2017 Q1.
Furniture and Home Furnishings Products
In this first quarter of this year at a seasonally adjusted annual rate, Consumer spending on furniture alone totaled $109.7 billion dollars. Major appliances is the second largest home furnishings spending category at $41.4 billion. (Table E).
Although window coverings is the smallest of the home furnishings categories, it has experienced the largest post-recession surge in consumer spending increasing 42.1 percent. Table F visually depicts the indexed growth of spending on the major home furnishings categories post-recession. Carpets and other floor coverings have surged since 2015 with a total 32.2 percent growth since 2009. Both furniture and home furnishings accessories also experienced over 30 percent growth post-recession at 31.8 and 31.7 percent growth respectively.
Looking at the five year, one year and 2017 Q1 growth (Figure 2), all home furnishings categories except televisions and major appliances, exceeded 20 percent five-year growth. Spending on televisions has been depressed with only 2.4 percent five-year growth, although sales picked up the first quarter of this year. Major appliances has also underperformed growing 11.3 percent in five years. Growth last year was under 1 percent last year and continues to decline in the first quarter.
If curious about the spending categories with the largest increases, Table G shows the biggest winners and losers 2015 to 2016. Spectator sports are at the top of the winner’s list at 10.9 percent growth, followed closely by hairdressing salons and personal grooming Establishments at 9.4 percent. Gasoline and other energy goods are the biggest losers in consumer spending posting a 10.3 percent decline with second place going to securities commissions falling 5.2 percent.