American households spent an average of $81,905 in 2025, up 4.3% from a year earlier, as rising housing and food expenditures absorbed a substantial share of family budgets, according to new federal figures released Thursday.
The Consumer Expenditures report, published by the Bureau of Labor Statistics (BLS) on October 29, showed that average annual housing spending increased 5.8% to $27,790. Shelter costs rose 8.0%, while spending on rented dwellings increased 10.8%.
But the headline increase raises a more important question: How much of the additional household spending reflects higher essential expenses rather than a meaningful increase in consumption? My examination of the newly published expenditure tables finds that housing accounted for approximately 45% of the $3,378 increase in average annual spending between 2024 and 2025. Shelter alone represented nearly 39% of that increase.
These are my calculations using the BLS figures, not contribution estimates separately published by the agency. They show how strongly housing shaped the spending increase, although the survey does not establish how much resulted from higher prices, changes in consumption, or differences in household composition.
The findings also require an important qualification. The federal government shutdown interrupted expenditure survey collection during October and November 2025, requiring BLS to adjust the survey weights used to produce its annual estimates.
Housing Drives Spending
The BLS reported that housing represented 33.9% of average annual consumer-unit spending in 2025, making it the largest expenditure category. Housing spending increased from $26,266 in 2024 to $27,790 in 2025, a difference of $1,524 annually, or approximately $127 per month when expressed as a monthly equivalent.
Total average annual expenditures increased from a corrected 2024 baseline of $78,527 to $81,905 in 2025, a difference of $3,378, equivalent to about $282 per month. My calculation divides the housing increase of $1,524 by the total increase of $3,378. The result is approximately 45.1%.
In other words, about 45 cents of every additional dollar in average reported annual expenditures came from housing. This is an accounting contribution to the change in survey averages. It is not proof that higher housing prices independently caused 45.1% of total spending growth.
The shelter component provides a sharper view of where the pressure appeared. Average shelter expenditures increased from $16,317 to $17,626, a $1,309 increase. That represented approximately 38.8% of the overall increase in reported spending.
Within shelter, rented-dwelling expenditures rose from $5,660 to $6,272, an increase of $612, or 10.8%. Expenditures on owned dwellings increased from $9,310 to $9,988, a 7.3% increase, although BLS did not classify that change as statistically significant at its stated confidence threshold.
The distinction matters. The 10.8% increase in average rented-dwelling expenditures is not equivalent to a 10.8% increase in rents for every tenant. Survey averages can change with household characteristics, rental arrangements, geographic composition, and spending patterns.
The broader figures nevertheless demonstrate the importance of shelter in household budgets. Even as families adjust discretionary purchases, housing remains a large recurring expense.
The relationship is particularly relevant as Americans confront borrowing costs and affordability pressures across the housing market. Investozora has separately examined mortgage rate movements and housing construction, two important aspects of housing affordability that are distinct from the survey’s measurement of actual expenditures.
Housing Drives U.S. Household Spending Growth
Share of the $3,378 increase in average annual U.S. consumer-unit expenditures from 2024 to 2025.
Categories overlap: shelter is part of housing, and housing is included in housing plus food. Contributions should not be added together.
View underlying expenditure data
| Component | 2024 | 2025 | Change |
|---|---|---|---|
| Total expenditures | $78,527 | $81,905 | +$3,378 |
| Housing | $26,266 | $27,790 | +$1,524 |
| Shelter | $16,317 | $17,626 | +$1,309 |
| Rented dwellings | $5,660 | $6,272 | +$612 |
| Food | $10,169 | $10,633 | +$464 |
| Housing + food | $36,435 | $38,423 | +$1,988 |
Where Money Went
Housing was not the only category recording a statistically significant increase. Average food spending rose 4.6%, from $10,169 to $10,633, an additional $464 annually. Food consumed at home increased 4.3%, while spending on food away from home rose 5.0%. Within groceries, expenditures on meats, poultry, fish, and eggs increased 11.7%, reaching $1,579.
Together, housing and food expenditures increased by $1,988. Using the corrected 2024 expenditure baseline, I calculate that these two categories represented approximately 58.9% of the total $3,378 increase in average annual expenditures.
That concentration is important because food and housing are fundamental household expenses, although households retain some flexibility over food choices, housing arrangements, and other components within those categories. It would be incorrect, however, to conclude that all categories outside food and housing were unchanged.
Healthcare expenditures rose from $6,197 to $6,470, while entertainment spending increased from $3,609 to $4,084. Personal insurance and pensions increased from $9,797 to $10,175. The BLS did not classify those three major-category increases as statistically significant in its main comparison, despite the positive changes in their reported averages.
Transportation expenditures, meanwhile, increased only 1.3%, from $13,318 to $13,492. Average gasoline and other motor-fuel expenditures fell 5.4%, while other vehicle expenses increased 13.3%. The latter change requires special caution because BLS changed the survey source for one underlying vehicle-expense component, affecting year-to-year comparability.
The 2024 expenditure analysis provides useful historical context. Housing spending increased 3.3% in 2024, following a 4.7% increase in 2023. The latest 5.8% increase therefore represents faster growth in average housing expenditures than in either of those two preceding years. That does not establish an equally large acceleration in housing inflation. Expenditure growth includes more than price changes.
Spending Versus Inflation
The BLS reported that average annual expenditures increased 4.3% in 2025, while the Consumer Price Index for All Urban Consumers increased 2.6% on an annual-average basis. The two numbers measure different things. Consumer expenditure data measure how much consumer units report spending. The CPI measures changes in prices for a specified basket of goods and services using a separate statistical framework.
Higher expenditures can result from paying higher prices, purchasing more goods and services, shifting toward more expensive items, changes in the population being measured, or a combination of these factors. Consequently, the difference between 4.3% spending growth and 2.6% CPI inflation cannot automatically be described as the exact increase in real consumption.
The comparison is directionally informative, but the two measures are not directly interchangeable. The CPI’s 2025 annual-average comparison also has a specific data limitation. According to BLS technical notes, the 2025 average was calculated using 11 months of observations because the October CPI was unavailable during the funding lapse.
For readers following the relationship between consumer prices and monetary policy, Investozora’s CPI measurement guide explains the separate inflation framework. Our coverage of core PCE inflation addresses another price measure used to assess inflation trends.
The distinction is especially important when comparing the BLS household survey with the Bureau of Economic Analysis’s national accounts. In its October 7 state spending analysis, the BEA reported that current-dollar personal consumption expenditures increased 5.3% nationally in 2025.
That figure is not inconsistent with the BLS report’s 4.3% increase. The BEA measures economy-wide personal consumption expenditures using national-accounting methods, while the BLS Consumer Expenditure Surveys estimate spending by consumer units using household-reported information and survey weights.
Differences in coverage, population measurement, statistical methodology, and the treatment of particular expenditures make the two measures unsuitable for a simple one-for-one comparison. The BEA also identified healthcare and housing and utilities as the largest contributors to nationwide current-dollar consumption growth in 2025.
That independently supports the importance of housing in the broader spending picture, without establishing that the two federal datasets measure identical transactions or contributions.
Income and Affordability
The household expenditure report also showed that average income before taxes increased 6.4%, reaching $110,847 in 2025 from $104,207 in 2024. That was faster than the 4.3% growth in average expenditures. At first glance, the difference could suggest an improvement in the relationship between income and spending.
But it does not establish that the typical household had more money remaining after paying its bills. The income figures are before taxes. The expenditure figures are averages across consumer units, and the difference between these two means is not a direct measurement of disposable income, savings, or individual household cash flow.
Income distributions also matter. The BLS reported average annual spending of $37,935 among consumer units in the lowest income quintile, compared with $159,512 in the highest quintile. Average income before taxes ranged from $18,125 in the lowest quintile to $286,188 in the highest.
Those comparisons show substantial differences across income groups, but they should not be interpreted as proof that every lower-income household spent more than it earned or that every higher-income household accumulated savings.
Averages can be influenced by retirees, students, temporarily low-income households, transfers, borrowing, accumulated assets, and differences in household composition. The income and spending figures therefore describe broad distributions rather than individual balance sheets.
Separate evidence from the Federal Reserve’s household well-being report, published in May 2026, adds a useful perspective. The Fed found that 58% of adults said price changes over the preceding year had made their financial situation worse, including 14% who said the effect was much worse.
The Fed also found that 35% of adults reported higher monthly spending than a year earlier, compared with 32% reporting higher monthly family income. Those responses are not directly comparable to the BLS expenditure-growth percentages, because they measure individuals’ reported experiences using a different survey and methodology.
They nevertheless reinforce a distinction that the national spending figures alone cannot resolve: rising expenditures do not necessarily translate into greater financial comfort. Investozora has previously examined household wealth levels and consumer sentiment. Wealth, sentiment, income, and expenditure are separate indicators, and none should be treated as a substitute for the others.
The Missing Data
A major complication in the new figures is the interruption to survey collection during the 2025 federal government shutdown. The Census Bureau, which collects the Consumer Expenditure Surveys for BLS, could not conduct collection in October and November 2025. Collection resumed December 5.
Under the missing-data methodology, BLS adjusted survey weights to compensate for observations that were not collected. The effects differed between the Interview Survey, which captures larger or recurring expenses through a three-month recall period, and the Diary Survey, which records shorter-term purchases.
BLS explained that its Interview Survey captured some expenditures from the disrupted months through later interviews, but the missing collection still reduced the number of reported transactions for several reference months. For affected Interview Survey observations, the agency used weighting factors of 1.5 or 3, depending on the estimated shortfall.
For the Diary Survey, October and November collection was missing entirely. BLS doubled the weights for September and December to represent the missing months. These adjustments were designed to make the annual estimates usable despite gaps in the survey.
But they did not recreate the actual missing interviews and diaries. BLS said simulations using historical data indicated that the adjusted estimates should remain accurate, although with greater variance because of the smaller sample. The agency also acknowledged that the true effect of the missing data cannot be directly measured without observations from the missing period.
That matters when interpreting the 2025 estimates, particularly where spending varies seasonally or between household groups. The BLS statistical significance tests provide additional protection against overinterpreting random differences, but they cannot completely eliminate measurement uncertainty introduced by missing observations.
There is a second comparability issue. The new release reports a corrected 2024 total expenditure estimate of $78,527, rather than the $78,535 published in the earlier annual report. BLS states that some previous estimates were corrected after publication and that the corrections did not meet its threshold for republication.
I used the revised $78,527 baseline in my year-over-year contribution calculations because it is the comparator supplied in the October 29 release. Using the older figure would produce a slightly different dollar increase. The difference is small, but identifying the correct data version matters when attempting to reproduce official results.
The 2025 release also introduced updates to the geographic sample and the calculation of standard errors. Those methodological changes should be considered alongside the missing-data adjustments when evaluating apparent year-over-year movements.
What Remains Unclear
The new expenditure report establishes that Americans spent more on average during 2025, with housing making the largest identifiable contribution to the increase.
What it does not establish is whether the same households consistently experienced larger housing bills, how much of the change reflects higher prices rather than changes in consumption, or whether the financial burden intensified equally across renters, homeowners, regions, and income groups.
The rise in rented-dwelling expenditures is particularly consequential, but its interpretation requires more detailed evidence than a national average can provide. A renter paying more for the same home faces a different financial situation from a household spending more after moving to a larger apartment. Both can contribute to higher average expenditure figures.
Similarly, a homeowner making a larger housing outlay because of a changed financing arrangement is not necessarily experiencing the same economic change as a household paying more for repairs or utilities.
More detailed 2025 survey tables by housing tenure and income, together with their standard errors, are needed to determine how broadly the observed increases were distributed.
The new report arrives against a wider backdrop of concern about living costs, borrowing, and spending capacity. Investozora’s analysis of borrowing costs and inflation pressures provides additional context, although those indicators cannot independently explain the Consumer Expenditure Survey results.
The most defensible finding from the October 29 release is narrower and more concrete: housing accounted for approximately 45% of the increase in average annual consumer-unit expenditures during 2025, while housing and food together accounted for nearly 59%.
Whether that reflected a broad deterioration in affordability, shifts in household purchases, or a combination of higher prices and changing consumption patterns remains a question for more detailed inflation, income, and expenditure evidence.
