WASHINGTON – The cost for a middle-income family to raise a child born last year to age 18 is $245,340, a 1.8 percent increase from the previous year and the smallest jump since the financial crisis, according to the government.
Housing was the largest expense at 30 percent, unchanged from 2012, the U.S. Department of Agriculture said Monday in an annual report that showed wealthier families spend more than twice as much on their children as poorer households. Child care was the second-biggest cost in more affluent homes, while lower-income households spent a greater proportion on food.
Costs have climbed as the need for day care has increased and a recovery in U.S. home prices adds expense. The advance was the smallest since 2009, with inflation in check as health care costs rise more slowly, jobs are created and the Federal Reserve winds down record economic stimulus.
“Improving economic times would definitely help families be able to afford to spend more on kids,” Elizabeth Peters, director of the Center on Labor, Human Services and Population at the Urban Institute in Washington, said in an interview. “And they allow them to think about starting to have a family in a situation when they wouldn’t have before.”
The U.S. economy has expanded at an average annual rate of 2.2 percent since the 18-month recession ended in June 2009. Payrolls rose by more than 200,000 for a sixth straight month in July, the longest stretch for growth since 1997, according to the Labor Department. The improving economy may in turn encourage parents to spend more on their kids, Peters said.
U.S. inflation in the 12 months through June was 2.1 percent, the government said last month. The USDA report excluded payments for college, as well as government aid and financial contributions from sources other than parents.
The study, conducted since 1960, tracks seven categories of spending, such as housing, transportation and clothing, and is used to help courts and government agencies estimate child- support costs, the USDA said.
For typical two-child, two-parent families with income from $61,530 to $106,540 before tax, annual spending on each child was $12,800 to $14,970 last year, according to the report.
A family earning less than $61,530 a year before taxes will probably spend $176,550 in 2013 dollars, while parents earning more than $106,540 may pay $407,820 to age 18, according to the study.
Adjusted for anticipated annual inflation of 2.4 percent, raising a child in a middle-class family would cost $304,480 through 2030, the USDA said. The report includes an online calculator to help determine costs.