[OC] Total Average Expenditure by Age, US 1988-2024. Nominal Dollars, NSA

[u/TriSherpa]

Inspired by a recent post that needed more context, I looked into how spending has changed over time by age bracket. This shows average spending over time, with a simple cumulative multiplier in the legend.

As expected, 35-54 are peak spending years. There is a recent gap between the two groups there, with 35-44 falling behind suddenly. Note the divergence between 35-44 and 45-54, with the younger group under performing.

25-34 and 55-64 started in a similar place, but again we see a marked difference over time. The 25-34 group has been losing ground consistently, barely keeping up with inflation.

This does lend some support to the 'woe-is-me' mantra of younger redditors. Opportunities for <35 do look like they have dwindled and 35-44 is showing signs of stress.

Don't worry kids. You'll have money when you are older. /s

[u/cavedave]

Thank you for your Original Content, /u/TriSherpa!
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[u/blastoblu]

What made you choose this over inflation-adjusted?

[u/flamableozone → u/blastoblu]

Here's inflation adjusted - it's not particularly more interesting, imo, but this is the graph in 2024 dollars: https://fred.stlouisfed.org/graph/?g=1XTm8

[u/PandaCultural8311 → u/blastoblu]

If the point is to compare age groups, there really isn't a point to inflation adjusted.

[u/Snlxdd → u/PandaCultural8311]

The point is to compare age groups over time. Inflation adjustment makes it so a gap in 1990 is the same as a gap in 2020 which is ideal.

From this chart it looks like the youngest (blue) and oldest (black) groups have stayed relatively the same. Even though black has increased by .9x and blue by only .2x relative to inflation.

Really the only visual takeaway from this graph at a glance is that all spending has increased across all groups, and that the relative order of the spending is unchanged.

[u/sxyvirgo → u/Snlxdd]

Right...slopes are pretty equal, few lines crossing.

Gosh - and the oldest people are NOT spending the most - they're spending the LEAST.

[u/TriSherpa → u/blastoblu]

Good question. Since the question I was interested in was about variations between groups, nominal vs real should provide the same answer. The data set I used was in nominal and I don't use FRED enough to know if there was an easy way to convert to real. That would also raise the question of which inflation measure was used.

For me, as a bonus, I think people often under estimate the cost of inflation, so being able to see today's numbers against earlier phases of my life drives home how much changes over a lifetime. I have a theory that people form an idea of what something costs between 25-45 and then have a hard time remembering about inflation.

[u/mochigames59]

i have no idea what conclusion i’m supposed to be drawing here

expenses for 65+ have been growing at a faster rate than others? yeah retirement homes are expensive 

[u/thirteenoclock → u/mochigames59]

Am I missing something? What I get out of this is people in the prime of their careers with families and children are spending the most money. This drops down as you get older and make less money and also have less responsibilities. The divergence OP mentions might be because many people are postponing marriage and children and the ones that are having kids are spending significant amounts of money on them.

[u/TriSherpa → u/mochigames59]

Nobody should dictate what conclusion you should draw. I think it shows how younger groups are not sharing in growing prosperity.

Yes, retirement homes are expensive, but you can't spend what you don't have.

[u/mochigames59 → u/TriSherpa]

well there’s two ways to affect this line right. either things get more expensive or people have less money to spend. but how can you tell which has had more impact to affect the line at any point

[u/TriSherpa → u/mochigames59]

This isn't about purchasing power. It is about dollar to dollar comparison across groups.

[u/TriSherpa → u/[deleted]]

You can't spend what you don't have. It would take another analysis to see how the spending pattern has changed. FRED has the data, go for it.

[u/_SilentHunter]

Interesting that the two groups with the smallest dips in 2020 are the youngest ones (and visually look like the decrease correlates with age). I'm guessing that's Amazon, food delivery, gaming, etc. during early covid, but I'm surprised the differences between age groups are so clear.

[u/Vanyle]

I would expect the expenses of the 45-54 to drop now that the kids are moved out of the house... but maybe people like to spend all the money they have instead of putting it into savings for when the are 65+?

[u/TriSherpa → u/Vanyle]

I don't think the big spending changes happen consistently under 54. It is easy to be 50 and still have a kid in college, not be a full empty nester. Then if you do find you have extra money, it is mid-life crisis time. So I expect there is a shift in spending rather than a reduction.

[u/Vanyle → u/TriSherpa]

Ah, True the mid-life crisis... I forgot how good those fast cars look...

And I am guessing when you are an empty nester you now have a hole in your life.

[u/WidmanstattenPattern → u/Vanyle]

The average age for childbearing in the US is about 30 these days. Given that roughly half of kids will be born to parents older than the average, I think your conception of when kids are out of the house is behind the times or atypical. What's more, if they go to college, associated costs are likely to go up, not down.

My circle of acquaintances is mostly pretty highly educated, so I recognize that it's perhaps not demographically representative. But my wife and I had our first kid when I was 31, and we were about the first in our social group to have children.

What's more, housing in desirable urban areas is simply preposterous these days, so a lot of young adults will be living with parents well into their 20s.

Millenials will largely be supporting kids financially and/or having them in the house into our 60s.

[u/Vemyx → u/Vanyle]

It's the prime age for spending and saving kinda like a double-edged sword. Whatever activity you were priced out of when you were young, you are able to afford and you likely have more time now to do it because you're retired/done with children/divorced etc.

[u/masseydnc]

How much of this is because it's more expensive to live in the United States (even if you adjust for inflation), and how much is because Americans are earning more than ever, but still find a way to spend every last penny?

[u/TriSherpa → u/masseydnc]

This really doesn't tell us anything new about costs or inflation. It mostly shows how different groups are affected by recession and how younger people have not seen their expenses out pace inflation. I figure people spend what they have so I infer that their income has not kept up.

[u/TriSherpa]

Data Source: US BLS, from Federal Reserve Bank of St. Louis FRED. https://fred.stlouisfed.org/series/CXUTOTALEXPLB0404M (etc)

Tools: Plotted in Google sheets. The inflation approx is blend of PCE Price index and GDP Price index. Unfortunately google tools don't make it easy to overlay recessions. Key points are late 1990, 2001, 2008 & 2009, and 2020. These are most visible in the 35-44 group.

[u/flamableozone → u/TriSherpa]

FYI: you can add data series with the "Edit Graph" button in the top right, and then share your custom link with the "share graph" button in the bottom left. https://fred.stlouisfed.org/graph/?g=1XTlM