Housing and Food Now Take Nearly Half of What Americans Spend, the Most in 15 Years
American households are squeezing more of their paychecks into rent and groceries than they have in over a decade, and the pressure is already reshaping where investors park their money and where shoppers spend theirs.
In 2025, the average American household spent $27,790 on housing and $10,633 on food. Together, those two bills took 46.9% of the budget, the largest combined share in about 15 years.
The federal Consumer Expenditure Survey, released October 29, 2026, puts total spending per household at $81,905 in 2025, up 4.3% from $78,527 in 2024. Pretax income grew faster, rising 6.4% to $110,847, so the change shows up in what households bought, with necessities taking a larger share.
On October 30, 2026, the State Street Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) rose 1.41% to $89.42, while the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) fell 1.77%. The question is whether a fund that has already gained 10.94% in one month can keep rising.
Household Budgets Tilted Toward Essentials
Housing spending rose 5.8% to 33.9% of the total, and food rose 4.6% to 13.0%. Housing’s share was the highest since 2010, excluding the 2020 pandemic jump, and food’s share was the highest since 2011.
Meanwhile, transportation spending grew just 1.3%. Housing and food were the only major categories with statistically significant increases, and households spent $1,988 more on the two combined than in 2024. Fixed bills now take a bigger share. That leaves less room for discretionary purchases, and households’ budgets respond more sharply when rent or grocery prices rise.
Spending on meat, poultry, fish and eggs rose 11.7% to $1,579, twice what households spent in 2010. Protein made up about 24% of grocery spending in 2025, up from 19% in 2023.
That split affects staples companies differently. Packaged-food makers face higher input costs, while grocers see more dollars passing through their checkouts.
Diners Had Not Traded Down Yet
Spending on food away from home rose 5.0% to $4,142, which outpaced food at home, up 4.3% to $6,491. That means households in 2025 were still paying up to eat out.
The data for 2026 is harder on households, although it falls outside the survey. Private-industry wages grew 3.1% over the 12 months through September 2026, and inflation-adjusted wages fell 0.6%. September PCE inflation (the Fed’s preferred price gauge) ran at 3.6%, and the 30-year mortgage rate averaged 7.24% on October 29, 2026, versus 6.17% a year earlier.
When wages lose ground to inflation like this, shoppers usually move from restaurants to grocery aisles and from name brands to store brands. Discount retailers stand to gain from that shift, and branded makers stand to lose volume.
Why Staples Rallied While the Market Fell
People keep buying groceries and household basics when budgets tighten, so money moves into staples on weak days. As of June 30, 2026, XLP’s two largest positions were Walmart (NASDAQ:WMT | WMT Price Prediction) and Costco (NASDAQ:COST), the retailers most likely to pick up trade-down shoppers.
The rest of the fund is weighted toward branded soda, snack, tobacco, and household-goods makers, and after years of price hikes, those companies have less room to raise prices again without losing customers to private labels.
What Could Drive XLP ETF Next
Real wages are falling, consumer sentiment stood at 48.1 in September 2026, and the fund’s biggest holdings are the retailers that benefit when shoppers trade down.
The main risk is valuation. XLP is up 17.34% year to date. So some of the defensive story is already priced in, and protein costs could still squeeze margins at the food makers.
The fund’s $80.60 close from September 30, 2026, is the level to check. If XLP falls back below that level while real wages keep shrinking, the market will have rejected the defensive case, and this defensive reading would be wrong.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
