zerohedge.com / by Tyler Durden / 09/26/2012 15:46
As America’s mania with cell phones as an aspirational status fad hits new records every day, this borderline addiction to “thinner, longer” mobility and a sub-1 year upgrade cycle, is starting to extract its pound of flesh: average cell phone bills that have risen by over 10% in one year (from $1,110 to $1,226), even as total household spending rose by half, or $67. In a word: iNflation. It gets worse. As the WSJ reports, “spending on food away from home fell by $48, apparel spending declined by $141, and entertainment spending dropped by $126.” Like a true faux status/gadget junkie, Americans don’t care what other discretionary items are cut, even such “American staples” as eating out and watching movies, just so they can keep up with all the other Joneses sporting a brand new iPhone X+1, while everyone’s credit card bill just gets larger and larger, and the collective wealth evaporates.
More than half of all U.S. cellphone owners carry a device like the iPhone, a shift that has unsettled household budgets across the country. Government data show people have spent more on phone bills over the past four years, even as they have dialed back on dining out, clothes and entertainment—cutbacks that have been keenly felt in the restaurant, apparel and film industries.
The tug of war is only going to get more intense. Wireless carriers are betting they can pull bills even higher by offering faster speeds on expensive new networks and new usage-based data plans. The effort will test the limits of consumer spending as the draw of new technology competes with cellphone owners’ more rudimentary needs and desires.
So far, telecom is winning. Labor Department data released Tuesday show spending on phone services rose more than 4% last year, the fastest rate since 2005. During and after the recession, consumers cut back broadly on their spending.
Families with more than one smartphone are already paying much more than the average—sometimes more than $4,000 a year—easily eclipsing what they pay for cable TV and home Internet.