Spending in the Future

Americans have stagnating real incomes and seemingly endless rising housing prices. However, spending has decreased notably across a wide range of goods. Ther are a number of innovative tech companies tackling the underlying issues at work here, and the next 50 years will see a growing selection of higher quality goods and services at more affordable (or at least more equitable) price levels. 

The chart below has been making the rounds on the internet over the past few weeks (click the picture to enlarge):


The chart shows how Americans have spent their money in twelve broad categories over the last 75 years, adjusted for inflation. Across the basic needs of food, clothing, and shelter, shelter (housing) is the only category which has seen an increase – more than doubling to account for almost $18k in average spending per consumer. Food and clothing have both seen decreases, with clothing falling by ~40% and food decreasing ~14% (calculating by sight in the lack of the underlying data).

Also notable are large increases in healthcare and an initial increase, followed by slow decreases, in transportation costs. Education spending, while still accounting for a smaller absolute value, looks to have almost quadrupled, while alcohol and tobacco expenditures have decreased steadily. Reading has fallen to an almost negligible amount, while recreation and entertainment spending have almost doubled.

I think that a slew of startups and incumbent companies alike will have an outsize impact on the trends we see in this data.


Predicting the housing market is akin to predicting the direction of the stock market. I can’t do that, but it’s safe to say that housing as a percentage of consumer’s income can only increase to a certain level. Even if home values continue to increase as a percentage of take-home income, there are a number of companies that are allowing homeowners to maximize the value of their stake and share the risk of their investment:

Opendoor: Opendoor buys and sells houses using educated decisions driven by data. The company can close on a sale in a matter of days and consumers can also purchase homes from Opendoor’s inventory.

Point: Point unlocks the equity in your home without the use of debt or reverse mortgage structures. The company purchases a fraction of your home’s equity and pays cash upon closing. The homeowner retains the majority stake in the home and can buy or sell Point’s stake at any time.


The cost of clothing has fallen precipitously due to cheap overseas factories and advanced production methods. The future of clothing is not cheaper clothes, but rather a change in buying patterns. I think that clothing-as-a-service will be increasingly powerful in the coming decades. Businesses with this model charge monthly or ad-hoc fees to supply a consumer with a rotating rented wardrobe. Consumers who buy with this type of model receive more value per dollar but give up the benefits of ownership.

Stitch Fix: Stitch Fix send users a box of 5 clothing items that are picked out by a personal stylist according to the user’s ‘style profile’. Their algorithms and technology get better as more users rate clothing on the service for both fit and taste.

Rent the Runway: RTR started off renting expensive dresses to women who didn’t want to shell out $1,000+ for an item they might wear once or twice. The company has evolved to offering a service that allows women to rent multiple items at a time with unlimited exchanges for a fixed monthly fee.


The future of food is different delivery methods and alternative food sources. I think there will be two separate forces that affect how much we spend. First, waste will be reduced substantially through on-demand delivery of meals and ingredients when we need them. This will reduce spending, although we may pay more for the convenience. Second, people will pay up for premium and locally-sourced ingredients, and technology will make it easier for local farms and artisans to bring their goods to market.

Movebutter: The “Milkmen of the Future,” Movebutter is food delivery of premium ingredients. The company delivers a week’s worth of groceries at once. They source locally and eliminate the markup you pay at the grocery.

Exo: Exo makes protein bars using cricket protein (yes, the bugs). They are delicious. I don’t think the future means we all move to insect-based diets, but so much of the earth’s biomass is held by insects that you will see companies increasingly try to unlock value in novel ways.

Recreation and Entertainment

Much has been written about how millennials value experiences over possessions. Recreation and entertainment spending will increase as people seek out new and novel experiences across the globe. Further fueling this will be social media services that allow consumers to show-off their escapades to followers. Along with Airbnb, a few companies are tackling the problem of providing people with memorable experiences:

Joymode: Joymode allows users to rent all the equipment necessary for a wide range of experiences. They bring the supplies to your door and pick it up when you’re done. Current experiences include kits for a house party, camping trip, Super Bowl party, and giant board game night.

Eventbrite: Eventbrite powers the back-end technology stack and front-end promotions tools for events around the world. They have a huge market opportunity serving both the event organizers and the consumers discovering experiences.


Healthcare costs have an unclear future vis-à-vis the uncertainty around insurance programs. What is certain is that consumers will have more direct access to a wider array of personalized healthcare providers. Doctors will make more informed decisions about treatment using data from consumer’s personal electronic devices.

Forward: Forward is a service that uses technology like body scanners, blood testing, and DNA sequencing to provide a customized health treatment plan. They offer services out of their physical location (currently only in SF) and provide 24/7 access to dedicated specialists through their app.

Oscar: Oscar is the healthcare darling of the VC world. They provide a health insurance product that aims to simplify the opaque world of healthcare treatment. Oscar has dedicated physicians on-staff that users access via the app. The company also has a strong network of primary care providers that users can access for physicals and non-urgent care.


Everyone is familiar with technology’s impact on how humans move around. There are three main forces at work that will have the long-term effect of substantially decreasing ownership costs of all transportation methods: transportation-as-a-service, electric, and autonomous. In lieu of interesting companies in this space, I have linked to some interesting articles written by leading companies in the space about the future of transportation:

Tesla Master Plan, Part Deux

Lyft: The Third Transportation Revolution

In the second part of this post, I will discuss how education spending will need to increase substantially in the face of workforce automation.


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Author: Ben

Numbers and words guy

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