Fifty years ago, the average American household spent more on clothing than health care, and putting food on the table cost about as much as keeping a roof overhead. Since then, technological advances, globalization and housing shortages have radically reshaped how Americans spend their dollars.

Health-care, housing and education expenses have increased since 1972, while money spent on food, clothing and transportation has declined, according to a Washington Post analysis of Consumer Expenditure Survey data.

The typical American household has also changed. Families have fewer children, and young people are slower to create their own households. More people have college degrees, and retirees make up a swelling share of the population.

Some of the biggest shifts in day-to-day life have left their fingerprints in spending. Home computers and internet access were practically nonexistent in 1984 and now make up 2% of household expenses. And tobacco spending has declined sharply since 1972, when it took up more of the average budget than fresh fruits and vegetables.

But other lifestyle changes barely register.

Restaurant food has made up a remarkably steady share of Americans’ pocketbooks in the last 50 years, as has entertainment, which includes tickets to shows, audiovisual equipment, pets, hobbies and more. Spending on telephones, including cellphones, has been consistent since 1984, the first year with detailed data on phones.

What Americans buy within those categories, however, has evolved. Cellphones and data plans have replaced landlines and expensive phone bills. Restaurant spending moved away from lunches toward dinners, especially after 2020.

In contrast, the share of money going toward essentials like food, housing and medical care has dramatically changed.

The biggest shift has been in housing. At its low in 1984, 19% of a household’s budget went to housing costs. Today, it’s 27%.

The drastic rise stems from a decades-long housing shortage fueled by the increasing cost of building new homes, according to Laurie Goodman, an institute fellow at Urban Institute’s Housing Finance Policy Center.

“Every aspect of [home building] has way outpaced inflation, from labor costs to land costs, which goes back to zoning, to building costs, which go back to building codes,” says Goodman.

Renters and homeowners both felt these rising costs from 1984 to the mid-2000s. After the Great Recession, though, rent expenses continued going up while the cost of homeownership dropped.

While interest rates are high now, they’ve generally been low since 2000. That’s benefited homeowners, who can lock in a rate when they purchase or refinance to lower rates. Renters, on the other hand, are subject to new market rates every time they renew or start a lease.

Food has had the opposite trajectory since 1972. It’s gone from 20% of household spending to 14% over the past half-century, mostly in lower grocery bills. Much of that drop comes from higher efficiency farming. Farms in 2022 were twice as productive as they were in the 1970s.

“What we see in America pretty early on is a technological bias in favor of capital and equipment,” says Peter Coclanis, a professor of history at the University of North Carolina at Chapel Hill, “which raised the efficiency of American agriculture. And some of this efficiency gain translated into cheaper food costs.”

And while food prices have rapidly risen in the last few years, Americans still put less of their money toward food than people in any other wealthy nation. For instance, spending on groceries in France takes up twice as much of household spending than in the United States.

“We have, in a relative sense, the cheapest food in the world,” says Coclanis.

Changes in taste have also played a role. Today’s typical American household spends drastically less on meat, especially beef, and more on produce and prepared food.

Prepared foods, snacks, condiments and seasonings – categorized as “miscellaneous” – take up nearly three times the share of supermarket bills as they did in 1972, with prepared foods accounting for most of that increase.

Technological advances helped drive down food expenses, but had the opposite effect for health care. More medical knowledge often translates to more medical care.

“We’re healthier than we were decades ago,” said Larry Levitt, executive vice president of health policy at KFF, a nonprofit health policy and research organization. “But the increases in health spending have been wildly out of whack with improvements to health.”

Other wealthy nations where governments step in to keep health-care costs down have achieved similar or better improvements at far lower costs, according to Levitt. Health spending per capita in the United States is nearly double the average of other wealthy nations.

Health-care costs have also grown because of consolidation, creating an industry dominated by large providers, less competition and higher prices. Researchers estimate that hospital mergers alone accounted for over a billion-dollar increase in private health-care spending between 2010 and 2015.

In contrast to medical services and housing construction, products like clothing and vehicles can be made en masse in countries with lower labor costs and shipped to American consumers.

In 1972, the vast majority of clothing was made in the United States. Fifty years later, that share was 3%. Free trade agreements and the declining power of organized labor in the United States helped companies move manufacturing overseas, which reduced the prices of many consumer goods.

And even though Americans spend far less on clothing today, they’re buying five times as much as they did in the 1980s. A similar pattern holds in transportation: American households are more likely to have multiple cars today, but vehicles take up less of their budget.

The Consumer Expenditure Survey doesn’t provide a complete view of American budgets. Most kinds of savings and investments aren’t included. It counts the full cost of big-ticket items, like cars or college tuition, at time of purchase, rather than in loan payments over time. Still, the data provides an unparalleled view into American spending habits over the last half-century.

In the near term, experts believe health care, which to tends to lag inflation, is expected to continue taking up a greater share of pocketbooks. And experts say cost savings in overseas manufacturing will probably temper, preventing further falls in the prices of many consumer goods.

Some long-run changes in consumer spending are predictable: nearly 1 in 4 Americans will be 65 or older by 2050, probably continuing the rise in health-care expenses. Others are unforeseeable: Five years ago, no one would have predicted the pandemic spike in pet spending. In another 50 years, perhaps transportation dollars will finally go to flying cars.

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