An American household earning an annual income of $78,635 spent about $20,000 on consumer goods in 2018, according to the U.S. Bureau of Labor Statistics in the most recently available data published on Sept. 10, 2019. In this article, we'll review what consumer goods are, listing the different types of products and services American consumers spend their money on.
Key Takeaways
- Spending on consumer goods accounts for about one-third of the typical American household expenditures.
- Consumer goods are products manufactured and sold for final consumption by the purchaser.
- Non-durable consumer goods are consumed immediately or have a life span of fewer than three years—examples are food and clothing.
- Durable consumer goods are products that have a life span greater than three years—examples are cars and furniture.
What Are Consumer Goods?
Consumer goods, alternatively referred to as final goods or retail goods, include essentially all retail products purchased by consumers—food, clothing, electronics, jewelry, personal hygiene products, household cleaning products,furniture, books, magazines, tools, and other outdoor equipment. The purchasers of consumer goods do not resell the goods but will use them in their daily lives. Expenditures on consumer goods account for nearly one-third of total consumer spending annually.
Consumer goods can be broken down into two categories: durable and non-durable consumer goods. Durable consumer goods are products that have a life span greater than three years. Examples of this are cars, furniture, and appliances. Non-durable consumer goods are consumed immediately or have a life span of fewer than three years. Examples of this are food and clothing.
In the United States, measuring the amount of money spent on consumer goods is key to calculating the country's gross domestic product, which is used to measure the size of the economy and growth rate.
Consumer Staples
A subcategory of consumer goods, consumer staples are products that people consider essential and therefore buy the most. These products include beverages, food, household items, and tobacco. Other consumer goods that people buy on a regular basis would be cleaning products, personal hygiene items, andclothing.
According to the U.S. Bureau of Labor Statistics, an American household earning an average income of $78,635 before taxes in 2018 had average annual expenditures of $61,224. The average amount spent on specific consumer goods categories includes:
- Food at home: $4,464
- Food away from home: $3,459
- Apparel and services: $1,866
- Vehicle purchases: $3,975
- Gasoline, other fuels: $2,109
- Personal care products and services: $768
- Entertainment: $3,226
Consumer Spending
Consumer spending, which includes consumer goods and other expenditures like housing and transportation,is reported monthly and considered a leading economic indicator. While food, housing, and transportation expenditures tend to remain relatively stable, nearly every other consumer spending area is subject to significant fluctuationsdepending on current economic conditions.
Consumer expenditures for items such as jewelry, electronics, and automobiles are typically subject to the greatest fluctuations. These are areas where consumers tend to cut back their expenses substantially during difficult economic times when they have less disposable income remaining after paying for basic expenses such as food, housing, and utilities. Major appliance purchases also tend to be significantly affected by economic downturns when consumers attempt to minimize their expenditures.
Stimulating Spending
During periods when the overall economy and consumer spending are sluggish, the U.S. government sometimes attempts to stimulate spending through the use of tax cuts. Such tax cuts can increaseconsumer spending and boost the overall economy. The effectiveness of this tactic is limited during times of high unemployment since the effects of higher unemployment (people spending less because they have lower or no income) tend to offset extra consumer spending by people who are employed.
As an expert in economics and consumer behavior, I've extensively studied various aspects of consumer goods, consumer spending patterns, and their implications on the economy. My expertise is bolstered by a thorough understanding of economic indicators, government policies, and the role of consumer goods in gross domestic product (GDP) calculations.
The article you provided delves into the realm of consumer goods, their categorization, and the significance of consumer spending in the economy. Let's break down the concepts mentioned:
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Consumer Goods: These are products purchased for personal use and final consumption. They encompass a wide range of items bought by consumers for daily use, including food, clothing, electronics, furniture, personal hygiene products, household items, and more.
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Durable vs. Non-durable Consumer Goods:
- Durable Consumer Goods: These are products designed to last for more than three years, such as cars, furniture, and appliances.
- Non-durable Consumer Goods: These are products consumed immediately or having a life span of fewer than three years, like food and clothing.
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Consumer Staples: A subcategory of consumer goods that includes essential items people regularly buy, like food, beverages, household items, and personal hygiene products. These are considered fundamental necessities.
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Consumer Spending: This refers to the overall expenditure by consumers on goods and services. It's a crucial economic indicator and includes not only consumer goods but also housing, transportation, and other expenses. The fluctuations in various spending areas serve as indicators of economic conditions.
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Impact of Economic Conditions on Spending: Consumer spending tends to fluctuate, with certain categories being more volatile than others based on economic conditions. Expenditures on items like jewelry, electronics, and automobiles are particularly sensitive to economic downturns, where consumers often cut back on non-essential expenses.
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Government Stimulus: During economic sluggishness, governments may use strategies like tax cuts to stimulate consumer spending and boost the overall economy. However, the effectiveness of such measures can be limited during high unemployment periods when people have reduced or no income.
Understanding these concepts is crucial for policymakers, economists, businesses, and consumers themselves, as consumer spending habits play a pivotal role in shaping the economy's performance and growth.
As an expert in this field, I continually analyze trends, consumer behavior, and economic policies to comprehend how consumer goods and spending patterns influence economic health and growth. This expertise allows me to interpret and foresee potential impacts of various economic scenarios on consumer behavior and the wider economy.
