The figure that dominates the headlines suggests a consumption level that most families would not recognize as their own. Spending by top earners pushes the average beyond what most families spend, changing how fixed-income households evaluate their budgets.

The Federal Reserve’s 2025 Survey of Consumer Finances (SCF) puts the national average for nonhousing spending at $48,700 a year.

The typical family spends thousands less than that benchmark, because a thin slice of high earners inflates the figure above the midpoint. The Federal Reserve’s note highlighted the median as the more representative benchmark for households whose incomes are well below the top 10%.

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The top 10% of earners account for 28.5% of all nonhousing outlays

The median family spent $33,700 a year on nonhousing costs, $15,000 below the average of $48,700. The gap exists because families in the top 10% of earners spent an average of $138,800 per year on nonhousing costs, the Federal Reserve’s SCF found. 

That group alone accounted for 28.5% of all nonhousing spending nationwide, nearly double the share of the bracket just below it, the Federal Reserve’s analysis indicated.

Mark Zandi, chief economist at Moody’s Analytics, told Fortune that top-20% household spending grew 6.5% while bottom-80% spending showed no real inflation-adjusted growth.

<strong>This gap has persisted since the pandemic, which helps explain why most Americans are upset about their financial situations and the broader economy’s performance</strong>.

Families in the bottom fifth of the income distribution accounted for just 7.2% of all nonhousing spending. Their average annual outlay was $17,600, which means the highest-earning tenth spent roughly eight times as much as the lowest-earning fifth.

How the new SCF spending question closed a decades-old data gap

Before 2025, the Fed’s wealth survey tracked food costs, housing, and vehicle purchases, but it lacked a question about total spending. Researchers who needed comprehensive spending data relied on the Bureau of Labor Statistics’ (BLS) Consumer Expenditure Survey or the Panel Study of Income Dynamics, the Federal Reserve’s researchers noted. 

Both of those surveys routinely miss the wealthiest households, leaving a blind spot at the top of the income distribution.

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The new question asked families to report all purchases over the prior 12 months, excluding rent, mortgage payments, and retirement contributions. Aggregated nationally, those responses totaled $6.58 trillion in nonhousing spending.

For validation, the Fed compared its totals with the BLS survey, which recorded average household spending of $78,535 for 2024, including housing. After subtracting housing costs from both datasets, the nonhousing totals from the two surveys aligned closely.

The new spending measure also showed that roughly one-quarter of surveyed families had saving rates at zero or below. For those households, total outlays consumed every dollar of after-tax income, leaving no financial cushion against rising prices or unexpected costs.

The Federal Reserve’s new spending question fills a long-standing data gap, revealing $6.58 trillion in nonhousing spending and widespread household financial strain.

Inside Creative House / Getty Images

Food holds steady while vacations expose the sharpest income divide

Groceries showed the smallest gap between median and average spending in the survey, because every family has to eat, regardless of income. The average family spent $7,700 on food at home, while the median spent $6,000, the narrowest category gap in the survey, the survey reported.

The widest gap appeared in vacations and entertainment, where the average was $4,200 and the median just $1,000. Part of that gulf reflects that 39% of all families reported zero vacation spending. 

Families in the top income decile accounted for 40% of all vacation and entertainment outlays nationwide, the Federal Reserve’s researchers documented.

Food away from home fell between the two, with the average at $3,500 and the median at $2,400. Dining out is more discretionary than groceries, so higher-income families do it more frequently, pushing the average above the midpoint. 

The Federal Reserve’s data showed that discretionary categories such as vacations and dining out had the widest income-driven gaps, while essentials such as groceries varied the least between median and average households.

Median gives fixed-income retirees a more accurate spending benchmark

Retirees drawing on Social Security and savings face a compounding pressure between rising essential costs and flat incomes that the national average obscures. Essential spending for lower-income households rose 14.5% between 2004 and 2024, while incomes grew just 5.5%, the National Women’s Law Center (NWLC) found.

The mismatch is why the median offers a more grounded reference point for budgets without a paycheck behind them, the NWLC analysis indicated.

Food at home consumes roughly 30% of total nonhousing spending for families in the lowest income brackets, the Federal Reserve’s analysis revealed. 

Courtney Alev, senior director of Product Management at Credit Karma, told AARP that retirees should map every essential cost before building a budget. Americans order food delivery 3.7 times a month on average, spending roughly $1,566 a year.

The median marks the exact center of the spending distribution, where half of households spend more and half spend less, according to the Federal Reserve’s SCF. Retirees who land near that center are tracking with the country’s midpoint.

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