What America Buys and Why

-#include virtual="/time/2006/includes/americanumbers.txt"-->Americans have never had problems shelling out cash, but as a nation of 300 million and counting, we are buying more than ever before. Every day U.S. consumers purchase 154,000 pounds of Starbucks coffee, 125,000 Barbie dolls and about 29 million cans of Mountain Dew.

Who we are — our nation's demographic composition — is an important factor in deciding what we buy. So added to our mix of Frappuccinos and Burger King Whoppers comes an array of ethnic restaurants and markets giving consumers more variety than ever before. "Thirty or forty years ago the average person hadn't eaten in a Chinese restaurant," says Diane Schmidley, a demographer and associate at the Reston, Va.-based American Consumer Institute. "That's a consumer choice that changed just because the chance became available."

Americans also are spending more per person than in the past. One reason is a cultural need for more efficiency — as our incomes rise, we need to spend on tools that help us make more money, says Larry Compeau, an associate professor of marketing at Clarkson University in Potsdam, N.Y. "Two-car family? Of course, how else are you going to get to work?" Compeau asks. "Cell phones? Most companies want to be able to contact you even if you are at home having dinner." We even feel the need to get the most out of our leisure time, spending money on faster Internet connections and cable channels by the thousand.

Status also drives us to shop. It's what motivates us to buy televisions larger than our neighbors', Compeau says. And as America grows more populated, we'll only feel more pressure to spend, says Elizabeth Goldsmith, a Florida State University professor of consumer economics. "A lot of it is watching what other people buy. The more crammed in we are, the more we watch each other."

But where is all the money coming from to buy, and do we have enough of it? According to the U.S. Bureau of Labor Statistics, we earned average after-tax incomes of about $22,000 per person in 2004 and spent about $17,000 per person. That means Americans save very little of what they earn and end up paying for much of what they buy on credit. "Credit cards have allowed a whole different way of buying," says Cynthia Jasper, a professor of consumer science at the University of Wisconsin-Madison. "People are saving a lot less and spending a lot more because it's so convenient."

Still, credit cards have been popular since the 1970s and America hasn't collapsed yet, so Clarke Caywood, an associate professor with Northwestern University's Integrated Marketing Communications program in Evanston, Ill., is not too worried. "We don't want to be buying ourselves to death here, but I think we are a long way from that," he says. "I don't think this is the burning of Rome."