One of the first things you want to understand before starting any business is your target audience—more specifically, their spending capacity.
With nearly $850 billion in ecommerce sales expected in 2021, the United States market definitely shows potential. So how much does the average American spend per year?
According to the latest statistics, the average yearly expenses of a US consumer in 2020 are $61,334. This averages to $5,111 per month.
This represents a 2.7 percent fall from 2019, during which average consumer spending in the US was $63,036 – the first decrease in years. In comparison, spending increased 1.9 percent from 2017 to 2018 and three percent from 2018 to 2019.
Prior to 2020, the average annual American spending had been rising steadily over the past few years. In fact, from 2017 to 2020, US consumers increased their average annual expenditure by 2.1 percent, with an average annual growth rate of 0.73 percent.
Interestingly, the rate of increase in average consumer spending in the US is slower than the rate of increase in income. From 2017 to 2020, average American income rose from $73,573 to $84,352—a 14.7 percent overall increase and an average annual growth rate of 4.7 percent.
Average Consumer Spending: Top Expenses
US consumers’ biggest expenditure is on housing. In 2020, the typical US consumer spent $21,409 on housing, which covers expenses on both owned and rented dwellings, housing utilities, operations, supplies, as well as all furnishings and equipment. This represents 34.9 percent of their average yearly expenses and a 3.5 percent year-over-year increase.
US consumers’ second-highest expense is transportation. Of the average yearly expenses in 2020, $9,826, or 16 percent, is spent on transportation. This includes vehicle purchases, gasoline, public transportation, and other related expenses.
The third-biggest expenditure is food. The average US consumer spent $7,316 on food in 2020, 10.4 percent less than they did in 2019. This is followed by personal insurance and pensions, on which $7,246 is spent.
In total, the top three expenditures of US consumers in 2020, housing, transportation, and food, add up to $38,551—or 62.9 percent of their average yearly expenses.