Forbes: How Americans Spend Their Money

By Helen A. Coster, Forbes.com

How does your household budget stack up?

'Tis the season for turning otherwise normal people into up-at-dawn, deal-seeking lunatics. What better time than the holidays to look at how consumers -- in the U.S. and around the world -- spend their discretionary dollars (as opposed to outlays on necessities like food and housing).

For a U.S. snapshot, Forbes turned to SpendingPulse, the economic research arm of MasterCard Worldwide, to break down Americans' discretionary spending -- all $1.13 trillion of it in 2009, slightly down from $1.16 trillion in 2008 -- across 10 categories: air travel, auto parts and service, electronics and appliances, furniture, lodging, apparel, department stores, jewelry, luxury (excluding jewelry) and restaurants. With personal savings on the rise in the wake of the latest downturn, that grand total looks like it will slip again, to $1.03 trillion, in 2010.

"The employment situation has driven down spending and consumer confidence," says Michael McNamara, vice president of research and analysis for SpendingPulse. "Many people don't feel as wealthy as they once did."

[Scroll down to see a list of how Americans spend their money, by category.]

But they still enjoy a nice dinner out. Restaurants accounted for the largest slice of America's discretionary spending last year, eating up $392 billion, down less than 1% from 2008.

The only category that pulled in more dollars in 2009 than in the previous year was "auto parts and service" -- little surprise as cash-strapped drivers looked to squeeze more miles out of their current rides. Auto parts and services drove in $164 billion in 2009, up 2.8% from 2008.

Everything else took a beating, thanks to a nasty mix of weak demand and price cuts. Electronics: down 8.6%, to $99.5 billion; furnishings, down 10%, to $88.8 billion; apparel, down 4.2%, to $177 billion.

Even the "luxury" category lost its luster. Well-heeled consumers spent $10.1 billion at Saks, Bergdorfs and other luxury retailers last year, down 9% from 2008. "Luxury brands have to reconnect with people," says McNamara. Some affluent people aren't wealthy anymore."

While the U.S. economy was on the mend in 2010, the road to recovery still appears to be a long one. After retreating from double digits, the unemployment rate recently crept back up to 9.8%.

How Americans Spend Their Money
(Annual Discretionary Spending is defined as the collective outlays on all 10 categories listed below.)

Air Travel
Total Spent in 2009: $41.9 billion
Percentage of Annual Discretionary Spending: 3.7%
Year-Over-Year Change: -0.7%
See Stats for 2007 & 2008

Auto Parts & Service
Total Spent in 2009: $164 billion
Percentage of Annual Discretionary Spending: 14.5%
Year-Over-Year Change: 2.8%
See Stats for 2007 & 2008

Department Stores
Total Spent in 2009: $72.5 billion
Percentage of Annual Discretionary Spending: 6.4%
Year-Over-Year Change: - 5.8%
See Stats for 2007 & 2008

Electronics & Appliances
Total Spent in 2009: $99.5 billion
Percentage of Annual Discretionary Spending: 8.8%
Year-Over-Year Change: -8.6%
See Stats for 2007 & 2008

Furniture
Total Spent in 2009: $88.8 billion
Percentage of Annual Discretionary Spending: 7.9%
Year-Over-Year Change: -10%
See Stats for 2007 & 2008

Jewelry
Total Spent in 2009: $27.5 billion
Percentage of Annual Discretionary Spending: 2.4%
Year-Over-Year Change: -7.4%
See Stats for 2007 & 2008

Lodging
(Hotel and other temporary accomodations, not primary residence)
Total Spent in 2009: $54.9 billion
Percentage of Annual Discretionary Spending: 4.9%
Year-Over-Year Change: -2.4%
See Stats for 2007 & 2008

Apparel*
Total Spent in 2009: $177 billion
Percentage of Annual Discretionary Spending: 15.6%
Year-Over-Year Change: -4.2%
(*The definition of this category has been broadened since the previous version of this story was published.)
See Stats for 2007 & 2008

Luxury (Excluding Jewelry)
Total Spent in 2009: $10.1 billion
Percentage of Annual Discretionary Spending: 0.9%
Year-Over-Year Change: -9%
See Stats for 2007 & 2008

Restaurants
Total Spent in 2009: $392 billion
Percentage of Annual Discretionary Spending: 34.6%
Year-Over-Year Change: -0.7%
See Stats for 2007 & 2008

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