Everything about the American economy feels…off, right now. The job market is behaving strangely, the stock market is volatile, and the integration of artificial intelligence into the workforce is causing widespread uncertainty. But amidst all this economic ambiguity, there’s a statistic that, upon closer inspection, is perhaps the most historically unusual of all: 10.4 percent.
That figure represents the share of disposable income that Americans spent on food in 2024, encompassing groceries, restaurant meals, and even those late-night delivery orders. It amounts to roughly ten cents of every dollar earned. While this might seem significant given recent grocery bills or reports of individuals spending a substantial portion of their income on food delivery services, it’s crucial to understand this within a historical context.
In 1901, the Bureau of Labor Statistics’ first major household expenditure survey revealed that the average American family allocated a staggering 42.5 percent of its budget to food – and that was *just* food, excluding housing and other expenses. Adjusted for today’s median household income, that would equate to approximately $2,600 per month dedicated solely to groceries. Even as recently as 1947, Americans were still spending 23 percent of their income on groceries alone, before factoring in dining out. By the 1960s, that figure had only decreased slightly, hovering around 15 percent.
This long, gradual decline from 42 percent to 10 percent is a profoundly important economic trend in American history, driven as much by increasing wealth as by advancements in food production. It’s a story that, surprisingly, rarely gets told.
The initial observation of this pattern came from a German statistician named Ernst Engel in 1857. Analyzing roughly 200 working-class family budgets in Belgium, Engel discovered a striking correlation: poorer families spent 60 to 70 percent of their income on food, while wealthier families spent less than 50 percent. The wealthier one became, the smaller the proportion of income allocated to food.
This observation became known as Engel’s Law, and it has remained a remarkably consistent finding in economics, validated across countries, time periods, and datasets. The principle is simple: as income rises, the percentage spent on basic necessities like food decreases, freeing up resources for other aspects of life.
Engel’s Law is significant because food expenditure, as a percentage of income, effectively serves as an index of freedom. When two-thirds of your income is consumed by food costs, little remains for education, healthcare, savings, or leisure – the elements that contribute to a fulfilling life. As that percentage declines, opportunities expand.
This transformation wasn’t accidental; it was the result of a revolution in American agriculture. In 1940, one American farmer could feed approximately 19 people. Today, that same farmer feeds nearly 170. This represents a nearly nine-fold increase in productivity in less than a century. In 1850, the majority of American workers were employed in agriculture; today, that number is under 2 percent. We now produce significantly more food with far fewer people, using less land.
Consider corn, a cornerstone of the American food system. From 1866 to 1936, corn yields remained relatively stagnant at around 26 bushels per acre. The introduction of hybrid corn, synthetic fertilizers, mechanization, and modern genetic engineering dramatically changed this. By 1950, yields had risen to 38 bushels per acre. Currently, they exceed 180 bushels per acre – a sevenfold increase in productivity.
The result? The USDA found that real retail food prices were actually 2 percent *lower* in 2019 than in 1980, even before accounting for the vast improvement in variety and quality. Americans now have access to food from every continent, in every season, at prices that would have astonished their grandparents.
This trend isn’t unique to the United States. Globally, Engel’s Law holds true: Nigerians spend approximately 59 percent of their consumption expenditures on food, Bangladeshis 53 percent, and Chinese consumers around 21 percent. Americans, at under 7 percent, are among the lowest in the world.
The Current Landscape
However, the recent past complicates this narrative. Food prices rose 23.6 percent between 2020 and 2024, with eggs experiencing an 8.5 percent spike in 2024 alone due to avian flu. Beef and veal prices also increased by 5.4 percent. The post-pandemic inflationary surge was real and impacted households, particularly those in the lowest income quintile, who spent 32.6 percent of their after-tax income on food compared to 8.1 percent for the highest quintile.
Even at the peak of the 2022 food price increases, the share of income Americans spent on food remained lower than in any year before 1991. The perceived “crisis” was, in effect, a return to early-1990s prices – which would have seemed remarkably low to those living in the 1950s.
recent data suggests that the narrative of Americans blowing their budgets on food delivery apps is misleading. Americans are spending *less* on food away from home and *more* on groceries, with younger consumers increasingly opting to cook at home.
This isn’t to dismiss the challenges facing the American food system. The 10.4 percent figure is an average, masking significant inequalities. In 2023, the lowest income quintile spent 32.6 percent of their income on food, while the highest spent only 8.1 percent. Programs like SNAP provide crucial support, serving roughly 42 million people per month, but the disparity remains substantial.
the low cost of food often comes at a hidden price. The rise of ultra-processed foods, engineered for convenience and shelf life, has contributed to obesity, diabetes, and cardiovascular disease. The environmental impact of industrial agriculture – greenhouse gas emissions, fertilizer runoff, and biodiversity loss – represents a set of externalized costs that consumers don’t directly pay. The welfare of the billions of animals raised for food is also a significant concern.
The fact that the average American family can now feed itself on roughly a tenth of its income is a remarkable achievement. It frees up resources for education, healthcare, savings, and a better quality of life. This is human freedom, measured one grocery receipt at a time.
