CONSUMER SPENDING PATTERNS IN THE
BALTIMORE METROPOLITAN AREA, 2006-2007 (PDF)

Consumer units¹ in the Baltimore, Md. metropolitan area spent an average of $53,244 per year in 2006-2007, according to results from the Bureau of Labor Statistics’ Consumer Expenditure Survey. Sheila Watkins, the Bureau’s regional commissioner, noted that this figure was 8.0 percent higher than the $49,279 expenditure level for a typical United States household. While households in the Baltimore area spent more than the U.S. average, they tended to allocate their shares similarly among the major expenditure categories. Still, expenditures for personal insurance and pensions accounted for a significantly larger² share of average annual expenditures in the Baltimore area than they did nationwide, while health care represented a significantly smaller-than-average share. (See chart A.)

Chart A. Percent distribution of total average expenditures in the United States and Baltimore metropolitan area, Consumer Expenditure Survey, 2006-2007

chart data

This report contains annual data averaged over a two-year period, 2006 and 2007. The data are from the Consumer Expenditure Survey (CE), which is collected on an ongoing basis by the U.S. Census Bureau for the Bureau of Labor Statistics (BLS). The CE is the only national survey that provides both complete data on household expenditures and the demographic characteristics of those households. CE data are available for the nation, the 4 geographic regions of the country, and 18 metropolitan areas. Survey data cannot be used to make cost of living comparisons between areas. Expenditures vary among areas not only because of economic factors such as the prices of goods and services and family income, but also because of differences such as the age of the population, climate, consumer tastes, family size, etc. However, expenditure shares, or the percentage of a consumer unit’s budget spent on a particular category, can be used to compare spending patterns across areas. The survey provides average expenditures for consumer units. An individual consumer unit may spend more or less than the average, depending on its particular characteristics.

Housing, the largest expenditure category, accounted for 35.9 percent of a typical Baltimore area household’s total budget, similar to the 33.9-percent national average. In comparison to four other metropolitan areas with similar populations to Baltimore, expenditure shares for housing were also close to the national average in Seattle (34.8 percent) and Cleveland and Minneapolis (each at 34.7 percent), but were significantly higher than average in San Diego (41.5 percent). (See table 1.) Overall, 10 of the 18 published metropolitan areas had expenditure shares for housing significantly above the U.S. average and only Houston had a lower-than-average share. (See chart 1.)

The majority of housing expenditures in Baltimore went toward shelter (62.4 percent), which includes mortgage interest, property taxes, repairs, and rent, among other items; this was not significantly different from the 59.0 percent spent nationally. (See table A.) Utilities, fuels, and public service expenses accounted for 20.7 percent of total housing expenditures in Baltimore; nationwide, they made up 20.6 percent. The rate of homeownership in Baltimore was 71 percent, higher than the national average of 67 percent. Among the other four areas chosen for comparison, homeownership rates were also higher than average in Minneapolis (73 percent), but were close to that for the nation in Cleveland (68 percent) and Seattle (67 percent), and lower in San Diego (52 percent).

At 16.3 percent of the total budget, transportation was the second-largest expenditure category in the Baltimore area; this was not significantly different from the national average of 17.7 percent. Expenditure shares for transportation were also similar to those for the nation in Cleveland and Seattle, at 17.5 and 16.9 percent, respectively. However, households in San Diego (13.3 percent) and Minneapolis (14.5 percent) allocated significantly less of their budgets to transportation compared to the nation. Among the 18 published metropolitan areas, 8 had lower-than-average expenditure shares for transportation, while just 2 had above average shares. (See chart 2.)

Of the $8,673 in annual expenditures for transportation in Baltimore, 93.6 percent was spent buying and maintaining private vehicles; this compared to the national average of 94.0 percent. (See table 2 for detailed expenditure levels.) The average number of vehicles per household in Baltimore, at 1.7, was close to the U.S. average of 1.9. The average number of vehicles was also close to the national norm in Minneapolis (2.2), Cleveland (2.1), and San Diego (1.7), but was higher in Seattle (2.4).

The remaining 6.4 percent of a Baltimore household’s transportation budget was spent on public transit, which includes fares for taxis, buses, trains, subways, and planes. This share was not measurably different from the national average of 6.0 percent. (See table B.) Among all 18 published metropolitan areas only 3 allocated at least 10.0 percent of their transportation dollars to public transportation: New York (13.5 percent), San Francisco (11.5 percent), and Seattle (10.9 percent). Households in Cleveland (3.0 percent) and Dallas (4.1 percent) spent the smallest portions of their transportation budgets on public transit. (See table C.)

Payments for personal insurance and pensions, the third largest expenditure category in Baltimore, accounted for 12.0 percent of the typical household’s budget, significantly higher than the national average of 10.8 percent. Households in San Diego also spent a higher-than-average share of their budgets on personal insurance and pensions, at 12.2 percent, while Cleveland spent a significantly lower share, at 9.8 percent. Households in Minneapolis (11.0 percent) and Seattle (10.9 percent) had shares similar to that of the nation. Of the 18 metropolitan areas published, only San Diego and Washington spent a measurably larger share of their budgets on personal insurance and pensions than on food.

Baltimore consumer units spent 11.7 percent of their budgets on food, similar to the national average of 12.4 percent. Cleveland (11.5 percent) and Minneapolis (11.4 percent) also allocated expenditure shares similar to that of the nation, while the portions of budgets spent on food in San Diego (9.7 percent) and Seattle (10.9 percent) were significantly lower.

Households in Baltimore spent $3,386, or 54.4 percent, of their food dollars on food at home and the remaining 45.6 percent on food away from home, such as restaurant meals, carry-outs, food or board at school, and catered affairs. In comparison, the average U.S. household spent 56.2 percent of its food budget on food at home and 43.8 percent on food away from home. When compared to the nation, neither Baltimore nor any of the four areas chosen for comparison spent a significantly different portion of their food budgets on dining out.

Baltimore area households allocated 5.1 percent of their budgets to entertainment, similar to the 5.4 percent spent by the average household in the U.S. As in Baltimore, households in Minneapolis (6.6 percent), Seattle (6.0 percent), San Diego (5.4 percent), and Cleveland (4.7 percent) allocated shares similar to the nationwide average.

Out-of-pocket health care expenses—which include health insurance premiums, medical services, drugs (prescription and nonprescription), and medical care supplies—accounted for 4.6 percent of total household expenditures in Baltimore, measurably lower than the 5.7 percent nationwide. However, consumer units in Cleveland (6.9 percent) spent a higher-than-average portion of their budgets on health care, while those in Minneapolis (6.2 percent), Seattle (5.3 percent) and San Diego (4.8 percent) had expenditure shares close to that for the nation.

Cash contributions accounted for 3.6 percent of a typical consumer unit’s spending in Baltimore, comparable to the 3.7-percent nationwide average. Shares for cash contributions were also similar to the national norm in Seattle (5.3 percent), Minneapolis (4.9 percent), San Diego (3.6 percent), and Cleveland (3.3 percent).

Spending on apparel and services accounted for 3.3 percent of total expenditures in Baltimore, similar to the 3.8-percent share allocated nationally. Among the other four areas, expenditure shares for apparel and services were also close to that for the U.S., ranging from 4.7 percent in Cleveland to 3.5 percent in Seattle.

As noted, Baltimore is 1 of 18 metropolitan areas nationwide for which Consumer Expenditure Survey (CE) data are available. We encourage users interested in learning more about the Consumer Expenditure survey to contact the Mid-Atlantic Information Office at (215) 597-3282. Metropolitan area CE data and that for the four geographic regions and the United States are available on our Web site at www.bls.gov/ro3/.

Technical Note

The current Consumer Expenditure Survey (CE) program began in 1980. Its principal objective is to collect information on the buying habits of American consumers. The consumer expenditure data are used in a wide variety of research by government, business, labor, and academic analysts. The data are also required for periodic revision of the Consumer Price Index (CPI).

The survey consists of two components, a diary or recordkeeping survey, and an interview survey. The Diary Survey, completed by participating consumer units for two consecutive 1-week periods, collects data on frequently-purchased smaller items. The Interview Survey, in which the expenditures of consumer units are obtained in five interviews conducted every 3 months, collects data for larger-cost items and expenditures that occur on a regular basis. The U.S. Census Bureau collects the survey data.

Each component of the survey queries an independent sample of consumer units which is representative of the U.S. population. Over the year, about 7,000 consumer units are sampled for the Diary Survey. The Interview Survey is conducted on a rotating panel basis, with about 7,000 consumer units participating each quarter. The data are collected on an ongoing basis in 91 areas of the country.

The integrated data from the BLS Diary and Interview Surveys provide a complete accounting of consumer expenditures and income, which neither survey component alone is designed to do. Due to changes in the survey sample frame, metropolitan area data in this release are not directly comparable to those prior to 1996.

The expenditure data in this release should be interpreted with care. The expenditures are averages for consumer units with the specified characteristics, regardless of whether or not a specific unit incurred an expense for that specific item during the recording period. The average expenditure may be considerably lower than the expenditure by those consumer units that purchased the item. This study is not intended as a comparative cost of living survey, as neither the quantity nor the quality of goods and services has been held constant among areas. Differences may result from variations in characteristics such as consumer unit size, age, preferences, income levels, etc. Users should keep in mind that prices for many goods and services have risen since the survey was conducted.

In addition, sample surveys are subject to two types of errors. Sampling errors occur because the data are collected from a representative sample rather than the entire population. Nonsampling errors result from the inability or unwillingness of respondents to provide correct information, differences in interviewer ability, mistakes in recording or coding, or other processing errors. The year-to-year changes are volatile and should be interpreted carefully. Sample sizes for the metropolitan areas are much smaller than for the nation, so the U.S. estimates and year-to-year changes are more reliable than those for the metropolitan areas.

Some expenditure components are subject to large fluctuations from one year to the next because these components include expensive items that relatively few consumers purchase each year. Thus, shifts from year to year in the number of consumers making such purchases can have a large effect on average expenditures. Examples of these types of expenses are purchases of new cars and trucks in the transportation component, and spending on boats and recreational vehicles in the entertainment component.

The CE significance tests are used in this release to compare expenditure shares for 14 expenditure categories in the United States to selected metropolitan areas (areas in this release are listed below). Expenditure shares for housing and transportation that are above or below that for the nation after testing for significance at the 95-percent confidence interval are identified in charts 1 and 2 for the 18 published metropolitan areas.

NOTE: A value that is statistically different from another does not necessarily mean that the difference has economic or practical significance. Statistical significance is concerned with the ability to make confident statements about a universe based on a sample. It is entirely possible that a large difference between two values is not significantly different statistically, while a small difference is, since both the size and heterogeneity of the sample affect the relative error of the data being tested.

Metropolitan areas definitions are based on Core-Based Statistical Areas defined by the U.S. Office of Management and Budget. The metropolitan areas and their component counties and cities discussed in this release are:

• Baltimore, Md. PMSA: includes Baltimore City and Anne Arundel, Baltimore, Carroll, Harford, Howard, and Queen Anne's Counties in Maryland.
• Cleveland-Akron, Ohio CMSA: includes Ashtabula, Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, and Summit Counties in Ohio.
• Minneapolis-St. Paul, Minn. MSA: includes Anoka, Benton, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Stearns, Washington, and Wright Counties in Minnesota and Pierce and St. Croix Counties in Wisconsin.
• San Diego, Calif. MSA: includes San Diego County in California.
• Seattle-Tacoma-Bremerton, Wash. CMSA: includes Island, King, Kitsap, Pierce, Snohomish, and Thurston Counties in Washington.

Definitions

Consumer unit - members of a household related by blood, marriage, adoption, or other legal arrangement; a single person living alone or sharing a household with others but who is financially independent; or two or more persons living together who share responsibility for at least 2 out of 3 major types of expenses - food, housing, and other expenses. The terms household or consumer unit are used interchangeably for convenience.

Expenditures - consist of the transaction costs, including excise and sales taxes, of goods and services acquired during the interview or recordkeeping period. Expenditure estimates include expenditures for gifts, but exclude purchases or portions of purchases directly assignable to business purposes. Also excluded are periodic credit or installment payments on goods or services already acquired. The full cost of each purchase is recorded even though full payment may not have been made at the date of purchase.

Income before taxes - the total money earnings and selected money receipts during the 12 months prior to the interview date.