Traditionally, baseball has been considered “America’s favorite pastime.” And with the recent hoopla over the breaking of Hank Aaron’s home-run record, it would seem that the sport certainly does generate enough interest to deserve that moniker.
But perhaps there is a new pastime that is fast overtaking baseball, if it hasn’t already. Whereas baseball is limited to specific ball parks and certain dates and times, the new pastime knows no boundaries, either in time or location. It can be done in stores or sitting on the couch at home.
So what is it? Some consider it (or used to consider it) primarily the purview of women, but that is not entirely correct. It’s gaining ground with men, and teenagers are completely off the charts. I’m talking, of course, about shopping. I guess our obsession is a good thing, because consumer spending accounts for approximately two-thirds of the US total economic activity.
The latest Commerce Department report indicated that retail sales climbed about 0.3% last month. That was excellent news, especially since spending had dropped 0.7% in June, the worst showing in some 16 months.
High gasoline prices and the fallout from the slump in the housing market have caused shoppers to be a little more cautious in opening their wallets. However, with the US economy’s growth rate during the second quarter of the year at 3.4% and a continued modest pace anticipated for the remainder of 2007, consumers are still willing to part with a lot of their hard-earned income.
And just what are we spending our money on these days? On average, Americans spend about 16.7% of their income on “essentials” such as living quarters and furnishings. Another 11.5% is spent on medical care, with 8.2% going for food. Transportation, recreation, and clothes account for some 7.9%, 5.8%, and 4.1%, respectively. Last month, most consumers focused their attention on clothes, furniture, and electronic products, while the purchase of automobiles declined slightly.
Of course, the definition of “essential” varies widely, depending on the lifestyle to which one is accustomed. College students, for instance, spend more than $11 billion per year on snacks and beverages. Another $3 billion is being spent on CDs and tapes. (Now I know where some of my children’s money is going.)
If you grew up drinking tap water as I did, you might be surprised to know that Americans spent around $15 billion on bottled water last year. It’s expected to top $16 billion this year! Times have certainly changed. Today’s generation frequently views with disdain any water than doesn’t come in a clear plastic bottle. For a product that you can get practically free, that’s a big change in attitude, especially considering the fact that the bottled water industry barely existed 30 years ago.
For those who have pets, it’s certainly no surprise that the upkeep for these furry friends is often quite expensive. Last year, Americans spent approximately $41 billion taking care of their pets. That’s more than the gross domestic product of all but 64 countries in the world! It’s also double the amount spent a decade ago. Over the next couple of years, total expenditures for our family pets will likely hit $52 billion.
So what’s behind today’s shopping habits? Generally speaking, it’s an expanding economy, a relatively strong employment market, and rising incomes. There is also a new attitude that’s supporting spending. A couple of generations back, most families had one income earner and a couple or more kids. Frugality was the key word. Today, only around 25% of households are represented by a married couple with children; the lowest percentage since 1960 (and many of those have more than one person in the workforce).
Without the burden of meeting the needs of growing children, more households are now open to joining the culture of spending. Not nearly as much thought is given to savings as in the past. It’s not just the teeny-boppers, however, who are doing the spending. Older citizens are also playing an important role in this new custom. The Baby Boomer generation’s accumulated wealth and associated spending is now flowing into the economy as they reward themselves for their successful careers and purchase the things they didn’t have when they were younger.
The concern for caution wrought by the Great Depression is fading from our collective memory in light of the continuing upward surge in our economy. Even so, Americans are very savvy consumers and look for value in their purchases. The rise of discount retailers, big box stores, and the Internet has fundamentally changed shopping attitudes. For many Texans, an opportunity for value will happen this weekend during the state’s ninth annual sales-tax holiday weekend. Since it was created in 1999, Texas shoppers have saved some $336 million in state and local taxes over this special three-day period.
If consumers participate in this year’s shopping opportunity as expected, they will incur a tax savings of approximately $52.1 million. While a discount of 8.25% wouldn’t seem like much in a different context, we love a chance to avoid paying the government. Moreover, retailers use the “holiday” as a time for sales and promotions. All-in-all, it should be a good weekend for our new favorite pastime.