Consumers often complain about higher food prices. But the increase has been offset by rising disposable personal income, with Americans spending about the same percentage of their income on food as they did in 2000, a federal report says.
Americans spent about 10% of their disposable personal income on food in 2019, a rate that has held steady since 2000, according to the report written by Eliana Zebailos and Wilson Sinclair with the Economic Research Service, or ERS, an arm of the U.S. Department of Agriculture.
Disposable personal income, or DPI, is the amount of money a family or individual has left to spend or save after paying personal income taxes. So, Americans annually spent about 10 cents of each post-tax dollar of income from 2000-19 on food.
Note that the report's numbers don't include 2020, when COVID-19 caused many Americans to eat more often at home and less often away from home. Eating at home usually is less expensive, so the share of DPI spent on food may drop in 2020 and possibly in 2021, too. On the other hand, economic problems associated with the pandemic has cut into many Americans' DPI, which also affects the share of it spent on food.
"It will be interesting to watch what happens next," said Michael Boland, a University of Minnesota economist who Agweek asked to comment on the ERS report. "Put the COVID year (2020) aside, and I think the trend will keep going, with more food being eaten away from home."
Boland is a professor in agribusiness management and information technology at the University of Minnesota and a professor of agricultural economics in the College of Food, Agricultural and Natural Resources Sciences. He also is director of the Minnesota Food Industry Center, which describes its mission as "serving to promote and establish agricultural education excellence in Minnesota across the industry."
In contrast to what happened in 2000-19, the average share of Americans' DPI spent on food dropped from 17% in 1960 to 9.9% in 2000. Rising personal incomes and greater efficiencies in the U.S. food system helped to account for that, the report said.
Another factor noted in the report: Average DPI in the United States, adjusted for inflation, grew 3.3% per year from 1965 to 1985 and 2.8% per year from 1986 to 2000.
Since then, however, the average rate of increase of DPI from 2010-19 slowed to 1.9% per year from 2001 through 2019. In addition. more DPI has been spent on food eaten away from home, which as already noted generally costs more. Finally, food-away-from-home prices increased by 68.3% between 2000 and 2019, while food-at-home prices rose by 44%. The combination of the three factors apparently has caused the rate of DPI spent on food to hold steady, despite the increases in DPI, the report noted.
Changes in the workforce and eating habits are responsible for the long-standing trend of more food eaten away from home, Boland.
"With more women working away home, it just became more customary to eat out (from 2000 to 2019), and more people quit eating breakfast (a meal traditionally eaten at home)," he said.
Many baby boomers (the generation generally defined as people born from 1946 to 1964) have reached retirement, further increasing the number of Americans eating out. And the growing popularity of so-called "grocerants," a hybrid of grocery store and restaurants, also reflects greater interest in eating away from home, he said.
A number of factors, including family size and immigration patterns, will influence how much DPI is spent on food away from home in the future., Boland said.
But the pandemic's impact — which has caused more office workers, in particular, to work and eat at home — will be especially important, at least in the foreseeable future. Whether they continue to work and eat at home, or return to office buildings and eat at nearby restaurants, is a big unknown, Boland said.
"I think COVID will have something to do with the trend line (the general statistical pattern over time)" going forward, he said.