As for dining out for personal enjoyment, that too frequently becomes the black hole of a family’s budget. According to the U.S. Bureau of Labor Statistics, 12% of a family’s household budget is spent on food, but 43% of that line item is gobbled up at restaurants.
Finding A Value Restaurant Is Like Finding A Value Stock This chart makes it seem like people are cutting way back on food, as does a blog post Time to short Jenny Craig? Both reminded me of the section of the paper A Model of Housing in the Presence of Adjustment Costs where they use food consumption data from the PSID as a proxy for pure consumption (a good with no durable, capital like aspect). It seems the Wall Street Journal is reporting (Consumers Cut Food Spending Sharply) a large fall in food expenditures. We could read this as a big shock to housing wealth causing consumption to fall to fuel savings. However, a few caveats. I did some checking around, and it seems that the decline in food expenditures does contain restaurant expenditures in addition to food at home. As we saw above, eating out is a big chunk of food expenditures, at least in part because eating out is more expensive. The BEA is reforming the categories they use for the personal consumption survey, starting in July they will split the current and Food and Tobacco into food and beverages purchased for off-premise consumption and food services and accommodations. So after the next decline in housing prices, we will actually know if it declines in response to changes in housing value. Silver linings and all that.”