Spending For Food Increased Almost 4% In 1997.

Food spending in the United States rose 3.9% to $714.9 billion between 1996 and 1997. Total expenditures for eating out (food away from home) also rose 3.9%, to $320.3 billion in 1997. This increase is higher than the 2.8% rise in 1996. Retail food expenditures (food at home) also increased

Also in 1997 there was a significant increase in food donations, with the amount from foodstores, farmers, manufacturers, and wholesalers up 2.8% from 1996, while supplies and food donated from eating and drinking places increased 3.2%.

The slower real (inflation-adjusted) growth for food away from home than for food at home in 1997 is unusual in a non-recessionary year. During the 1990-91 recession, for example, real spending on food away from home declined 0.4%, while spending for food at home rose 1.3%. One of the ways people economized during the recession was by eating out less often or by going to less expensive places. The share of total food dollars spent away from home declined from 44.7% in 1989 to 44.1% in 1991, reflecting the economic slowdown and the subsequent recession.

But with the subsequent economic recovery came increased spending on food away from home. In 1992, 1993, and 1995, spending for food away from home rose faster than that for food at home (in 1994, spending for both categories increased at the same rate). By 1995, spending for food away from home had reached new highs--46% of food expenditures and 35% of food quantities.

In 1997, the share of food dollars spent away from home dipped slightly to 44.8%. However, that may not show the complete picture. Counted in at-home food expenditures is the latest trend in foodservice--Home Meal Replacement (HMR), or meal solutions. Supermarkets are exploring HMR, which are fully or partially prepared foods, to compete with their fastfood and restaurant rivals.

HMR's main competition may be "meal deals." Made popular by fastfood establishments after the 1990-91 recession, meal deals are a combination of food and beverage items (such as hamburger, french fries, and soda) sold below the price of each item being purchased separately. For the first time in 22 years, meal deals available from restaurants and fastfood establishments are on the decline. According to a 1997 study, Consumer Reports on Eating Share Trends, only 27% of restaurant purchases were on a meal deal basis, while fast-food meal deals fell to 30% of all fast-food meals purchased in 1997.

Preliminary figures on total food sales (a beginning point for estimating food spending) in 1998 show spending for food at home up 1.7% from the same period in 1997 and spending for food away from home up 1.0%. Food sales exclude donations and food furnished to employees, patients, and inmates--all of which are included in the total food expenditures reported above.

Inflation adjusted food sales from 1997 to 1998 decreased 0.1% for food at home, while sales for food away from home fell 1.5%.

Personal Food Spending Posted Modest Increase

Personal food spending shows another perspective on the trend. It differs and behaves differently from total food spending because it excludes expenditures by governments and businesses (such as prisons, military messes, business travel, and entertainment), which are for food away from home.

Personal food expenditures rose 3.8% in 1997, while spending on recreation went up 8.6%, and medical care and drug expenditures increased 5.9%. Lower fuel prices in 1997 contributed to an increase of only 3.7% for personal spending on transportation, cars, and gasoline. Within personal food expenditures, spending for food away from home grew 3.9%, compared with a 3.8% increase in expenditures for food at home. In 1997, 10.7% of household disposable personal income was spent on food, down from 12.0% in 1985.

Households spent 6.6% of their 1997 disposable personal income for food at home and 4.1% on food away from home. (A decade earlier, Americans were spending 7.5% of their disposable personal income for food at home and 4.3% for food away from home.) In 1997, Americans spent about 26% of disposable personal income on housing (including supplies, fuel, and furniture), 16% on medical care and drugs, and 11% on transportation (including cars and gasoline).

Prepared by Annette Clauson, economist, Rural Economics Div, Economic Research Service, USDA. 202-694-5373. E-mail: aclauson @econ.ag.gov