Cars and Drivers

Americans Spend Less on Transportation Than in 1989

Paul Ausick

Published: October 2, 2017 11:45 am

Last Updated: January 12, 2020 7:36 am

In December 1989, the U.S. average price of a gallon of regular unleaded gasoline was $0.98. That had risen to $2.23 a gallon by December of 2016. Adjusted for inflation, the 1989 price was $1.88 a gallon.

Even though the price of gas was about a third more at the end of last year, Americans at all income levels are spending relatively less now on a percentage of income basis than they did in 1989 on all aspects of transportation. Including all income levels, 1989 spending on transportation accounted for 18.9% of total annual expenditures compared to 15.8% of total expenditures in 2016.

Spending on gas and motor oil accounted for 3.5% of all personal expenditures in 1989, compared to 3.3% in 2016. Looking at the lowest and highest quintiles of U.S. incomes, gasoline and motor oil expenditures in both years accounted for a larger percentage of income for the low income group, 3.9% in 1989 and 3.6% in 2016.

The data were compiled by Michael Sivak and Brandon Schoettle of the University of Michigan Sustainable Worldwide Transportation group and reported in a study titled “Personal Expenditures of Americans on Transportation: 2016 Versus 1989.” The researchers used data collected by the Census Bureau for the Bureau of Labor Statistics.

The study also found that not only did relative expenditures on transportation drop, absolute spending declined as well. Mean transportation spending in nominal dollars in 1989 amounted to $5,268 and to $9,049 in 2016. Adjusted for inflation, however, 2016 spending amounts to $4,675 in 1989 dollars, a drop of 11.3%.

Only housing accounts for more personal spending than does transportation. Spending on food accounts for the third largest category of expenditure in both years, but it also has declined: from 14.0% of 1989 spending to 12.6% of 2016 spending.

And where has spending grown the most? Health care accounted for 5.0% of spending in 1989, compared to 8.0% in 2016, and education costs have increased from 1.2% in 1989 to 2.3% in 2016.