24/7 Wall St.

The Census Bureau reports that the average American household spent $903 in 2008 on internet connections, cable TV, and video games.  The New York Times estimates that figure will be $997 this year.  The paper points out that cellphone costs could double the number to $2,000.

The number is only an average, so it is misleading. People below the poverty line probably spend very little on entertainment and “connectivity.” That means that households with incomes over $40,00o or $50,000 may well be spending $5,000 on products and services to connect to the internet, talk, text, shop online, watch TV, and play Madden 2010.

The extraordinary thing about the thousands of middle class households is that portions of peoples’ incomes that are involved. A household which brings in $50,000 a year is probably making no more than $35,000 after taxes. That would mean that 15% of its after tax dollars are spent on consumer electronics and the pipes that connect those products to the outside world.

Five thousand dollars buys 2,000 gallons of gas and close to three months of mortgage payments on the average 30-year mortgage on a $300,000 home. Most of the costs of electronics and connectivity did not exist a decade ago. Americans have given up something for these products and services. Maybe it is their savings and IRAs. No wonder no one can afford to retire.

Douglas A. McIntyre