U.S. Consumers Cut Back Spending On Everything Except Cellphones

Image courtesy of (MrStinkhead)

Since 2007, when the economy began to stink like a raw chicken left out in the sun, American consumers have reduced their spending on clothing, cars, eating out and entertainment. And yet, in that same period of time, they’ve been spending significantly more on their cellphones.

According to newly released figures from the Dept. of Labor, the average household spent $1,226 on phone service in 2011, up from $1,110 in 2007. What makes this figure even more noteworthy is that it comes at a time when many of us said goodbye to landlines in favor of a cellphone-only existence. So even though more people only have one phone, the average expenditures on phones has continued to increase.

Of course, during those years, more and more Americans have switched to smartphones, which generally come with pricier data plans. The Wall Street Journal reports that in 2007, wireless companies took in around $22 billion in revenue for data services. That number more than doubled to $59 billion by 2011, with analysts expecting it to top $100 billion by 2017.

While all this increased spending on cellphones was going on, U.S. consumers spent $48 less per year on dining out, $141 less on clothing and apparel, and $126 on entertainment.

Some families say they have continued to cut spending elsewhere just to afford the costly cellphone bills. And with the two largest wireless providers — AT&T and Verizon Wireless — looking to nudge customers into paying even more for data, it’s doubtful that we’ll be seeing a dip in monthly expenditures anytime soon.

The ultimate question is: At which point will wireless costs get so high that consumers realize they maybe don’t need to stream Netflix movies while riding the bus home from work?

Cellphones Are Eating the Family Budget [WSJ.com]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.