As household incomes decline, household spending is also going down for basic items such as food, clothing and housing while the cost of health care is eating up more of the family budget, according to the Bureau of Labor Statistics.
The bureau found that even as prices rose from 2009 to 2010 by 1.9 percent as measured by the Consumer Price Index, spending fell by 2 percent. That follows a 2.8 percent decline in spending from 2008 to 2009.
"People are coping with less income," said Josh Bivens, an economist at the Economic Policy Institute.
Mr. Bivens noted that recent reductions in spending have accompanied reductions in incomes as wages and the hours worked have fallen. The average income for a household has gone from $63,563 in 2008 to $62,857 in 2009 and then down to $62,481 in 2010.
A larger share of average household incomes has gone to health care, spending on which rose by 5 percent from 2008 to 2009 and another 1 percent to 2010. Health care spending now takes up $3,157 of household income, with the largest share of that, $1,831, being spent for insurance.
Food budgets have been cut for both dining in and dining out. In 2008, families spent $2,698 on dining out, but that decreased by about 3 percent to $2,619 in 2009. Then they cut another 4.4 percent from 2009 to 2010 when they spent $2,505 eating out.
While families at first kept their budget for eating at home steady ($3,744 in 2008 and $3,753 in 2009), last year the average food budget for dining at home was cut by 3.4 percent, or $129, to $3,624. Money was saved on meats (down $57), dairy products (down $26), and cereals and bakery products (down $4). But more was spent on fruits and vegetables (up $23).
While housing costs have fallen, it is mostly for those people who own their homes and have refinanced their mortgages and cut back on maintenance. In 2008 households paid an average of $3,826 in mortgage interest, which fell to $3,594 in 2009 and further to $3,351 in 2010.
Homeowner spending on maintenance, repairs and insurance also fell from $1,176 in 2008 to $1,112 in 2010. Rent, on the other hand, rose from an average of $2,724 in 2008 to $2,900 in 2010.
Across the board, though, utility prices have continued to rise, with the average of $43 in savings on natural gas over the last year going right to the electric companies that charged an average of $36 more in 2010 than 2009, the phone companies that charged $16 more, and the water, sewage and other utilities that added $8 to their bills -- for a net increase of $17 spent on utilities.
Bureau of Labor Statistics data shows that people started to cut spending on clothing as soon as the recession hit. In 2007, the average household spent $1,881 on apparel and services. That amount was down by almost 10 percent by 2010 to $1,700.
Households now also have fewer cars. There were two vehicles for the average household in 2008 and 2009, but in 2010 there were 1.9, which means that 5 percent of the households got rid of the second vehicle, not that the average household lost a tire.
Over the past two years, the average household still has 1.3 earners and 2.5 people.
The Consumer Expenditure Survey released Tuesday is based on "consumer units," which can be a family living together, a single person or two or more people living together who share expenses. A case of two or more people living together who are financially independent (think of roommates writing their names on the cereal boxes) is a household containing multiple consumer units.
Ann Belser: firstname.lastname@example.org or 412-263-1699.