The Shrinking Grocery Bill: How American Prosperity Rewrote the Rules of Food Spending

The American economy presents a perplexing picture. From a strangely resilient job market to volatile stock fluctuations and the disruptive influence of artificial intelligence, uncertainty reigns. Yet, beneath the surface of these headline-grabbing anomalies lies a quieter, more fundamental shift: Americans now spend just 10.4% of their disposable income on food. This figure, revealed by the USDA’s Economic Research Service, is historically low and signals a profound transformation in our relationship with sustenance.

A Century of Change: Understanding Engel’s Law

That 10.4% might feel substantial given recent grocery price increases – and reports of individuals dedicating over a quarter of their income to food delivery services – but historical context reveals a remarkable trend. In 1901, the Bureau of Labor Statistics found that American families allocated 42.5% of their budget to food alone. Adjusted for today’s income, that equates to roughly $2,600 per month. Even in 1947, groceries consumed 23% of income, before factoring in restaurant meals. As recently as the 1960s, total food expenditure hovered around 15%.

This dramatic decline from over 40% to just over 10% represents one of the most significant, yet often overlooked, economic developments in American history. It’s a story not just of food prices, but of increasing wealth and a changing standard of living.

The Other Engels: A German Statistician’s Insight

The story begins with Ernst Engel, a 19th-century German statistician – not to be confused with Friedrich Engels, the collaborator of Karl Marx. In 1857, Engel analyzed the household budgets of roughly 200 working-class families in Belgium. He observed a clear correlation: poorer families spent 60-70% of their income on food, while wealthier families spent less than 50%. This observation, now known as Engel’s Law, has proven remarkably consistent across time and cultures.

Engel’s Law isn’t merely an economic observation; it’s a measure of freedom. When a significant portion of income is devoted to basic survival, little remains for education, healthcare, savings, or leisure. As food costs decrease as a percentage of income, opportunities expand, and the potential for a fuller life increases.

The Agricultural Revolution: Feeding a Nation

The decline in food expenditure isn’t accidental. It’s the result of a revolution in American agriculture. In 1940, a single American farmer could feed approximately 19 people. Today, that number has soared to nearly 170. This nearly nine-fold increase in productivity, achieved in less than a century, is astounding. In 1850, the majority of Americans worked on farms; now, fewer than 2% do. We produce vastly more food with significantly fewer people on less land.

Consider corn, a cornerstone of the American food system. From 1866 to 1936, corn yields remained relatively stagnant at around 26 bushels per acre. The introduction of hybrid corn, synthetic fertilizers, mechanization, and genetic advancements dramatically changed this. By 1950, yields had risen to 38 bushels per acre, and today, they exceed 180. This represents a sevenfold increase in productivity per acre.

The result? The USDA found that real retail food prices were actually 2% lower in 2019 than in 1980, even accounting for improvements in variety and quality. Americans now have access to a wider range of foods, from around the globe, at prices that would have been unimaginable to previous generations.

This trend isn’t limited to the United States. Globally, Engel’s Law holds true: Nigerians spend about 59% of their consumption on food, Bangladeshis 53%, and Chinese consumers around 21%. Americans, at under 7%, are among the lowest.

Recent Price Spikes and the DoorDash Dilemma

However, recent price increases have raised concerns. A dozen eggs briefly costing $6 is a stark reminder of inflationary pressures. Food prices rose 23.6% between 2020 and 2024, with eggs spiking 8.5% in 2024 due to avian flu. But even at the peak of the 2022 food price surge, the share of income spent on food remained lower than in any year before 1991. The “crisis” was a return to early-1990s prices, which would have seemed remarkably low to those living in the 1950s.

Furthermore, as Mike Konczal points out, the narrative surrounding food delivery apps is misleading. Americans are spending less on food away from home and more on groceries, with younger generations increasingly opting to cook at home. The real story isn’t excessive spending on delivery; it’s a shift towards grocery shopping in response to rising prices.

What does this mean for the average consumer? Are we truly better off, or are we simply trading one set of problems for another?

The Hidden Costs of Cheap Food

The 10.4% figure is an average, and averages can be deceiving. Inequality is a significant factor. In 2023, the lowest income quintile spent 32.6% of their after-tax income on food, while the highest quintile spent just 8.1% – a fourfold disparity. Programs like SNAP and the National School Lunch Program provide crucial support, serving roughly 42 million people monthly, but the underlying inequality persists.

Moreover, “cheap” food comes with hidden costs. The agricultural revolution has led to the dominance of ultra-processed foods, engineered for convenience and shelf life. These foods contribute to obesity, Type 2 diabetes, and cardiovascular disease, creating healthcare costs that aren’t reflected in grocery bills. The environmental impact of industrial agriculture – greenhouse gas emissions, fertilizer runoff, and biodiversity loss – also represents externalized costs borne by society.

The true cost of cheap food extends to the welfare of billions of animals raised for consumption, a topic explored extensively by Future Perfect. Factory farming practices raise serious ethical concerns.

A Taste of Freedom

While acknowledging these challenges, it’s crucial to recognize the progress achieved. The ability of the average American family to feed itself on roughly a tenth of its income – a concept unimaginable to Ernst Engel in 1857 – is a remarkable civilizational accomplishment. Lower food costs free up resources for education, healthcare, savings, and a richer quality of life. This is human freedom, measured one grocery receipt at a time.

What steps can we take to ensure a more sustainable and equitable food system? How can we balance affordability with environmental responsibility and animal welfare?

Frequently Asked Questions About Engel’s Law and Food Spending