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Where does all the money go: Shifts in household spending over the last 30 years

Diane Whitmore Schanzenbach, Ryan Nunn, Lauren Bauer, and Megan Mumford

It is commonly supposed that economic change affects the size of a household’s overall pie without much altering the pie’s composition: consumers may have more or less to spend in a given year, but spending patterns remain relatively constant. Evidence suggests that this is far from the truth. Understanding shifting spending patterns, including how much money remains in households’ budgets after purchasing basic needs, is an important aspect of understanding economic security. A guiding principle of The Hamilton Project is that economic security and economic growth are mutually reinforcing, as economic security enables Americans to make investments in their future.

It is commonly supposed that economic change affects the size of a household’s overall pie without much altering the pie’s composition: consumers may have more or less to spend in a given year, but spending patterns remain relatively constant. Evidence suggests that this is far from the truth. Understanding shifting spending patterns, including how much money remains in households’ budgets after purchasing basic needs, is an important aspect of understanding economic security. A guiding principle of The Hamilton Project is that economic security and economic growth are mutually reinforcing, as economic security enables Americans to make investments in their future.

Download “Where Does All the Money Go: Shifts in Household Spending Over the Past 30 Years”

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