Spending trends reflect Twin Cities wealth

A federal survey finds expenditures in the Twin Cities on many luxury items rank among the top in the nation.

By David Peterson, Star Tribune

Kyle Halvorson of Eden Prairie is studying medicine in Omaha. When he needs furniture, however, he shops for it in the summer, back in the Twin Cities.

"Omaha is a great place go to school," he said. "But it's not necessarily the most vibrant place to live. They're trying really hard to bring it into the modern age. But when I come home, I go straight to IKEA."

Guys like him have made this area No. 1 in the federal government's latest national survey of consumer spending habits when it comes to home furnishings.

We're also first in our spending for entertainment -- and anywhere from third to sixth among major metro areas in a number of other categories -- including dining out, alcohol, and taking care of our skin and hair.

That's partly because we're third-richest of the 24 metro areas selected for comparison by the Bureau of Labor Statistics in Washington.

But we don't spend equally on everything. We don't spend a lot on fancy cars, for instance (17th), though we do need a lot of cars to get around in this transit-poor metro area (third in vehicles per household).

Without necessarily answering all the questions its statistics raise, the survey does offer insights into the cultures and climates of the nation's major metropolitan areas, experts say.

Compared with 10 years ago, our spending on what economists class as luxuries, including eating out and alcohol, is zooming, ranking among the highest in the land. And the results for dining out may be telling on a couple of levels, said Edina-based demographer Hazel Reinhardt.

On the one hand, we eat out a lot partly because we rank high in double-income families, meaning neither spouse lunches at home. "It doesn't prove that we're 'foodies,' " she said.

On the other hand, she added, "I have to say that I was at a restaurant not long ago at Galleria, which was not cheap -- entrees start at more than $20 -- and I saw people with young kids: 5-year-olds, 7-year-olds. And it kind of took my breath away! I ask myself, 'Are these people really that affluent, or is this a choice of spending that I would never have made, and wouldn't today? Is this a generational thing, or a class thing, or something else?' "

The Cleveland Plain Dealer, noting this week that the same survey shows Twin Citians spend almost twice as much eating out as people in Cleveland and its suburbs, only half-joked that the Ohioans, living as they do amongst the highest per-capita junk food restaurant concentration in the country, "seem drawn to places where you order over an intercom."

But the same is true in category after category, suggesting a basic difference in culture.

Don Weisse, vice president of sales, education and distribution for Aveda, who moved here from California, said he was not surprised that California cities such as San Diego top the list for personal care products and services.

It's combination of things, he said: "It's the money, and the vanity of it all, of course," he said, plus the sun: "The sun is the worst thing for your skin, and no product will ever counteract 20 years of sunburn and abuse of your skin."

But our fairly high sixth-place rank, vs. more blue-collar cities such as Cleveland -- and our first-place rank among Northern cities -- is about affluence and education, he said.

Rick Anderson, of France 44 Wines & Deli, Minneapolis, said the same is true for spending to drink, which has nearly doubled in a decade in the Twin Cities and ranks third nationally. A lot of that, he said, is about the rising cost of the premium products swarming into every category, be it wine, beer or spirits.

"People today don't drink what Granddad used to. In vodkas we've gone from 'premium' to 'ultra premium' to 'super ultra premium' -- from Smirnoff to Absolut to now Swedish brands selling for $60 a bottle, retail. But the same is true of beer: from Hamm's to microbrews, at a much higher price than before."

If the Twin Cities rank high vs. other metro areas, said his business partner, David Anderson, "what I hear from suppliers is that there's a large group of professional folks here who've been around world representing major corporations, and their tastes influence the market."

Even as we spend more to drink, we're spending less to read than 10 years ago -- even as incomes have risen. And we don't rank super high -- seventh, same as tobacco -- in spending on reading.

But that doesn't prove that we're reading less, said Toby Madden, regional economist for the Federal Reserve Bank in Minneapolis. "It may just be 'substitution' -- economist-speak for a computer-rich metro getting reading matter such as newspapers for free on the Web."

If the statistics raise as many questions as they answer, he added, the questions they raise are intriguing.

"This is a data set I haven't played with much, but the results open my eyes a little. I'd like to know more."


1ST

Entertainment

$3,656, up 62%

3rd

Eating out

$3,282, up 71 %

3RD

Alcohol

$750, up 89 %

6th

Pers. care items

$700, up 82 %

6TH

Housing

$19,341, up 57%

7TH

Reading

$179, down 19%

10th

Gas and oil

$1,853, up 56%

17TH

Cars

$3,140, up 22%
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In my house, alcohol isn't considered a "luxury."


It's a necessity. If I'm drunk, I don't realize I'm so hungry. Or, at least, I don't care.

I think it is primarily the relative affluence that would explain most of the stats. Gas and oil surprised me a bit. I may be being pollyanish given I've been in Minneapolis for all of a month though.

Jackie T

I'm a little sad to see that books have dropped in sales.
To be expected, I guess... (cable, net, DVDs, Magazines, Daily papers and periodicals)
Personally I hope to be somewhere in the middle of a book till the day I kick the bucket.
VIVA LIBRIS!

I wonder how the stats compare with our rates of money saved and consumer debt.