During my weekend BusinessWeek reading (the only periodical worth receiving in print still IMO), I came across this chart of household grocery spending over the past few decades which I found intriguing. It shows that as a percent of annual post-tax income, Americans continue to spend increasingly less each year. Less than ANY OTHER COUNTRY in fact. Half as much as those in France and 1/4 of those in India. Yet we’re broke. First, take a look at the chart to see where we’re getting more “value” or basically just spending less, then some thoughts:
(click to enlarge)
- I assume the Bush tax cuts have a lot to do with helping out the denominator since this is “after tax spending”. And for most Americans, tax deductions, credits and low tax rates have continued to stay low since the early 2000s.
- This “decreasing spending” pattern contrasts with my presumption that real inflation is much higher than the government routinely reports. After all, this inflation indicator [Everyday Price Index] is through the roof compared to the contrived government numbers. But maybe it’s not all that bad. Another possible explanation though, is that the chart ends at 2011 and we may well be seeing much higher inflation in 2013 than at the end of the chart. After all, we’re coming off a record year for gas prices, which certainly impacts food prices.
- Why are we broke? We have such a low burden on both groceries AND gas compared to so many other nations, yet we just stink when it comes to saving and personal responsibility. Is it the easy credit? Peer pressure to own a big home and big car? Going to college without regard for the bill? ($1 Trillion in Student Debt – time for a bailout?]Americans are really in a class of their own on everything from gun ownership to religiosity to horrific financial responsibility Somehow, we’re still “leaders” in the world.
- I think it all starts in the home. Most people I know that are either tightwads or fiscally responsible had frugal parents. Similarly, many of our friends that make really poor financial decisions have parents that have a screwed up balance sheet in their sixties now. The apples don’t fall far from the tree. We’ve done our best to impose some semblance of restraint and frugality in our children. We also have them very excited about saving due to this Bank of Mom and Dad I set up for them.
What Are Your Thoughts On This Dichotomy?