People have to eat, but the recession caused consumers to cut back on going out to eat and reduced their purchases of fresh produce convenience items, a recent U.S. Department of Agriculture Economic Research Service report reveals.
Aylin Kumcu, economist for the USDA ERS and coauthor of the report “Food Spending Adjustments During Recessionary Times” with fellow USDA economist Phil Kaufmann, said the main takeaway from the study is that consumers did indeed respond to the recession, which started December 2007 and ended in June 2009. Food spending, adjusted for inflation, declined 5% between 2006 and 2009, the USDA said.
“They did so by not necessarily by eating less food, but being smarter with their budget,” she said.
Prior to the recession, total food spending by all U.S. households topped out at $726 billion in 2006. That dropped to $709 billion in inflation adjusted dollars and sank to $690 billion in 2009.
Instead of eating out, consumers chose to eat at home more, she said. Inflation adjusted away-from home spending declined 11.5% between 2006 and 2009, whole spending at supermarkets increased from 2007 and 2008. In 2009, inflation adjusted spending for food eaten at home dropped, as consumers cut back even further.
The study did not examine particular food groups for changes in consumption during the recession, Kumcu said.
Middle income groups cut back the most, but low income consumers had to spend a higher portion of their income on food, she said. Kumcu said low-income consumers, who spend an average of 35% of their income on food, suffered lower wages but increased food stamp benefits during the recession
Preliminary estimates of total spending show that consumers may be starting to slowly recover from the recession, Kumcu said. “Total food spending seems to recovering but not that quickly,” she said.
A companion report, called “Consumers Cut Back on Convenience But Not Necessarily Quantity When Incomes Fall,” looks at sales of convenience-oriented leafy green items.
In the study, USDA economist Fred Kuchler reported that consumers sacrificed fresh produce convenience during the recession. Researchers found that sales of bagged leafy greens decreased relative to sales of unpackaged leafy greens when income levels fell, the study said.
The USDA said that in 2006, washed packaged leaf and baby spinach cost $3.32 per pound, while loose or bunched random-weight spinach sold for $1.05 per pound. Even so, bagged leafy greens products made up better than half of all retail green leaf purchases in 2009.
ERS researchers found that changes in disposable personal income had nearly an immediate effect on share of bagged leafy greens.
“A 1% increase in income typically leads to a 1.2% increase in bagged leafy greens’ share of total leafy green purchases, and an income decrease leads to a similar decline in the bagged share,” the report said. Kuchler said that economic growth and rising consumer incomes would increase the trend toward convenience. On the other hand, a prolonged recession could reverse that trend, Kuchler found.
The research found that changes in personal income didn’t change overall levels of consumption, but merely changed the ration between value-added produce and whole commodities.
“These findings show that consumers, in regard to leafy greens, sacrifice convenience before quantity in balancing food budgets,” Kuchler said in the report.