The rise in healthcare costs combined with stagnating incomes has forced many families to tighten their budgets and reduce spending in other areas over the last several years. According to The Wall Street Journal, middle-income Americans' spending on healthcare grew by 24 percent between 2007 and 2013, driven by an even larger rise in the cost of buying health insurance.
The need to save for the increasing cost of healthcare, in addition to other necessities, has increased the need for more discretionary spending on things like clothing, restaurant dining and entertainment. According to the New York Times, in-store and online sales over this Thanksgiving weekend were estimated to have dropped 11 percent from $57.4 billion last year to $50.9 billion this year, despite aggressive markdowns. The overall need to save may have contributed to these significant reductions in holiday spending.
Citing data from Kaiser Family Foundation, employees paid more for their workplace insurance with an average of $380 a month for family coverage in 2013, representing a 39 percent increase from 2007, according to WSJ.
Relief may be in the future, however. According to WSJ, while overall healthcare spending is expected to slowly continue to rise, U.S. households may spend slightly less as more people become insured, obtain premium subsidies or gain Medicaid coverage.
According to WSJ, consumer spending continues to make up slightly more than two-thirds of the U.S. economy, but exactly where families spend their money has shifted significantly. Analysis of the Labor Department's data on 2013 out-of-pocket spending for the middle 60 percent of the population (with annual incomes between $18,000 and $95,000) showed overall spending rose by about 2.3 percent between 2007 and 2013 while incomes only rose by one-half percent. Spending was cut back on furniture, clothing and even childcare, according to WSJ analysis.
While spending has been generally conservative over the last several years, investing in technology like cell phones and home Internet soared.
Since 2007, spending has decreased the most on residential phones (-30.7 percent), household textiles (-26.5 percent), women's apparel (-17.7 percent) and buying homes (-11.5 percent). In the same timeframe, spending has increased the most for health insurance (42.1 percent), cell phones (49.1 percent) and home Internet (81.3 percent).