Types of Consumer Spending
Data about consumer spending gives clues to the state of the nation's economy. Subcategories of consumer spending allow economists to analyze how the average household uses its income; consumer spending amounts and types are therefore crucial to understanding the larger picture.
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Identification
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The Bureau of Labor Statistics identifies different categories of consumer spending: necessities and non-necessities. Together, the two categories make up the aggregate, or total, of a household's spending.
Necessities
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In the strictest sense, necessities are defined as food, apparel and housing. Housing includes spending on both shelter (or the structure itself) and utilities.
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Non-necessities
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Non-necessities include consumer spending on household supplies and furnishings, transportation, health care (including health insurance), personal care items and entertainment. Alcohol and tobacco, reading, education, cash contributions to pension plans and personal insurance are also considered non-essential spending.
Analysis
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Types of consumer spending help shed light on how various households operate. The Bureau of Labor Statistics compiles research on spending through demographics such as income level, age and race.
Exceptions
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Food spending, though considered a necessity, also includes spending on " food away from home," or dining out. Some studies therefore separate dining out from statistics on necessities. Likewise, home furnishings are sometimes included as part of the housing necessity category.
Considerations
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When examining consumer spending statistics, it is important to read the methodology and underlying assumptions to understand how the study defines necessities and non-necessities.
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