The Shrinking Share of the American Grocery Bill: A Century of Agricultural Transformation
Everything about the American economy feels unusual right now. But one statistic stands out as particularly striking: 10.4 percent. That’s the share of their disposable income that Americans spent on food in 2024, according to the USDA’s Economic Research Service [1]. This includes groceries, restaurants, and delivery services, totaling roughly a dime of every dollar. While seemingly high given recent grocery price increases, this figure is historically low.
From 42% to 10%: A Historical Perspective
In 1901, the average American family spent 42.5 percent of its budget on food. In 1947, that number was 23 percent, and by the 1960s, it had fallen to around 15 percent. This long-term decline is a key economic trend, reflecting both increased wealth and advancements in food production.
Engel’s Law: Income and Food Expenditure
This phenomenon was first observed by German statistician Ernst Engel in 1857. He found that poorer families spent a much larger proportion of their income on food (60-70 percent) than wealthier families (under 50 percent). This became known as Engel’s Law, and it remains a consistent finding in economics. Food expenditure as a percentage of income is, in effect, a measure of economic freedom.
The American Agricultural Revolution
The dramatic decrease in food spending is largely due to the transformation of American agriculture. In 1940, one American farmer fed 19 people. Today, that number is nearly 170 [1]. The percentage of American workers employed in agriculture has fallen from a majority in 1850 to under 2 percent today.
Consider corn yields: from 1866 to 1936, yields were stable at around 26 bushels per acre. With the introduction of hybrid corn, fertilizer, and modern genetics, yields have increased to over 180 bushels per acre.
Recent Price Fluctuations and Affordability
While food prices rose 23.6 percent between 2020 and 2024, and specific items like eggs saw significant spikes, the overall share of income spent on food remained lower than in any year before 1991. Even during the 2022 price surge, spending remained relatively low compared to historical standards [4]. Recent data suggests Americans are shifting towards cooking at home to offset higher grocery costs.
Inequality and the True Cost of Cheap Food
The 10.4 percent average hides significant inequalities. In 2023, the lowest income quintile spent 32.6 percent of their income on food, while the highest quintile spent only 8.1 percent. Programs like SNAP help mitigate this disparity, but a substantial gap remains.
the low cost of food comes with hidden costs. Ultra-processed foods dominate the American diet, contributing to health problems like obesity, and diabetes. Industrial agriculture also has a significant environmental footprint, including greenhouse gas emissions and biodiversity loss.
A Civilizational Achievement
Despite these challenges, the fact that the average American family can afford food on roughly a tenth of their income is a remarkable achievement. This frees up resources for education, healthcare, and other essential aspects of life, representing a significant increase in human freedom.
As the U.S. Farm economy enters a period of softening in 2024 after years of record-high income, net farm income remains well above the 10-year average [3].