Americans slashed their food expenses more during 2007 to 2009 recession, by an inflation adjusted 5 percent— the largest decrease in at least 25 years according to a report from USDA’s Economic Research Service.
The report, titled “Food spending adjustments during recessionary times,” notes that the recent recession, from December 2007 to June 2009, was the longest period of economic decline since the Great Depression of the 1930s.
The authors also point out that while unemployment jumped from 4.6 percent in 2006 to 9.3 percent in 2009 and average household income declined, food prices increased substantially, peaking in 2008, when the annual rate of food price inflation was 5.5 percent.
Those factors combined to pressure consumers to spend less on food. According to the report, total food spending by all households peaked in 2007 at $726 billion. But by 2008, real food spending dropped to $709 billion, and during 2009 spending dropped again to $690 billion.
Restaurants often take the biggest hit when consumers look for ways to economize, and this recession was no exception. According to the report, food-away-from-home spending declined 11.5 percent between 2006 and 2009, while spending on food for preparation at home actually increased between 2007 and 2008, before declining 1.6 percent during 2009.
Spending patterns during this most recent recession were similar to those in the previous recession during 1990 and 1991, when spending on total food declined 3.5 percent, with a 4.0-percent increase in at-home spending and a 13.8-percent drop in away-from-home spending.
Other key points in the report include:
- During the 2007-09 recession, middle-income households cut total food spending by more than any other group. Households in the middle the middle 20 percent of the income distribution, with an average income of $46,012, decreased their real food expenditures by 12.5 percent from 2006 to 2009.
- Households in the lowest quintile (average income of $9,846) cut spending 1.8 percent, while the highest quintile (average income of $157,631) reduced food spending 5.7 percent.
- Real expenditures by middle-quintile households fell the most for both food at home (6.4 percent) and food away from home (20.8 percent).
- The lowest quintile households actually increased their real food-at-home spending during the recession by 3.2 percent, and they reduced food-away-from-home spending by 11.9 percent.
- Low-income households cut back proportionally less than other groups, in part because they already spent as little as they could, with little room for further reductions, and in part due to increased benefits under government programs such as the Supplemental Nutrition Assistance Program, formerly known as the Food Stamp Program.
- Whether or not the food spending adjustments of the 2007-09 recession will continue in the post-recession era remains to be seen, but 2010 ERS data suggest that food spending has begun to recover.
Read the full report from USDA/ERS.