American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
April 2011

How the Great Recession Beat You Up, Stole All Your Money, and Chased You Out of Town
IN THIS ISSUE:

1. Hot Trends: HOW THE GREAT RECESSION BEAT YOU UP, STOLE ALL YOUR MONEY, AND CHASED YOU OUT OF TOWN
2. Q & A:  WHAT IS THE CENSUS SURPRISE?
3. Cool Links:  2011 RETIREMENT SURVEY, 2010 GENERAL SOCIAL SURVEY, YEARBOOK OF IMMIGRATION STATISTICS
4. REFERENCE TOOLS:  AMERICAN BUYERS, BEST CUSTOMERS, HOUSEHOLD SPENDING, and WHO’S BUYING REPORTS

To see Cheryl Russell‘s Demo Memo blog, click here.

1. Hot Trends 

How the Great Recession Beat You Up, Stole All Your Money, and Chased You Out of Town

 

The Federal Reserve Board has finally issued the long-awaited 2009 update of the 2007 Survey of Consumer Finances. This unprecedented effort was funded by the Feds to record for posterity an historic event: what the Great Recession did to you. Well not to you personally, but to American households–and that includes you. By re-interviewing in 2009 the nationally representative sample of households that participated in the 2007 survey, the government’s researchers were able to measure the effect of the Great Recession on household assets, debts, and overall net worth. These are the findings (all comparisons are between 2007 and 2009; all figures are in 2009 dollars):

 

1. Net worth. Median household net worth fell 23 percent between 2007 and 2009, from $125,400 to $96,000. Sixty-three percent of all households experienced a decline in net worth. Among the biggest losers: Householders under age 35 (-37 percent), married couples with children (-25 percent), and households in the West (-32 percent).

 

2. Housing values. Median housing value fell 15 percent between 2007 and 2009, from $207,100 to $176,000. Because home equity accounts for the largest share of net worth, this decline was the single biggest drain on household wealth.

 

3. Retirement accounts. These are the second most popular financial asset (after transactions accounts), owned by 56 percent of households. The median value of retirement accounts fell by a modest 5 percent between 2007 and 2009. But householders approaching retirement suffered a much more severe setback. Among the oldest boomers, those aged 55 to 64, the median value of retirement accounts fell 17 percent, from $103,600 to $85,600. (Note: stocks are directly owned by only 19 percent of households. Their median value fell 35 percent between 2007 and 2009.)

 

4. Vehicles. The Great Recession greatly slowed vehicle sales. The result was a 26 percent decline in the median value of household vehicles, with their value falling from $16,200 to $12,000 as they depreciated.

 

5.  Debt. The percentage of households with debt fell slightly (from 80 to 78 percent). The median amount owed by debtors increased 8 percent between 2007 and 2009, to $75,600.

 

6. Mortgages. Mortgage debt accounts for the bulk–73 percent–of all household debt. Forty-nine percent of households had a mortgage on their primary residence in 2009, down from 50 percent in 2007. The median amount owed by households with mortgage debt was unchanged by the Great Recession, measured at $112,000 in both years. Median mortgage debt increased sharply for some, however. It grew 49 percent among householders aged 75 or older, and was up 23 percent among retirees.

 

7. Credit cards. Credit card debt is the second most common type of debt after mortgages. In 2009, 43 percent of households carried a balance on their credit cards–down significantly from the 48 percent of 2007. The median amount owed is relatively small–only $3,300 in 2009, up from $3,100 in 2007. Median credit card debt increased significantly for some, including householders under age 35 (+58 percent), householders aged 75 or older (+150 percent), college graduates (+34 percent), and households in the South (+29 percent).

 

8. Vehicle loans. This is the third most common type of debt after mortgages and credit cards. Thirty-four percent of households had vehicle loans in 2009, down from 36 percent in 2007. The median amount owed for vehicles grew 11 percent, from $11,200 to $12,400.

 

9. Student loans. A substantial 18 percent of households had education loans in 2009, up from 16 percent in 2007. The percentage of households with student loans is highest among householders under age 35 (37 percent), but is also common among householders aged 35 to 44 (20 percent), 45 to 54 (18 percent), and 55 to 64 (10 percent). Student loan debt obligations exceed vehicle loans and far surpass credit card debt. For households with student debt, the median amount owed was $15,000 in 2009, up from $12,400 in 2007–a 21 percent increase.

 

10. Home equity loans. The percentage of households with home equity line of credit debt climbed from 8.7 to 10.5 percent between 2007 and 2009. The median amount owed fell slightly, however, from $22,800 to $21,500.

For more on household wealth, see the reportSurveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009 and the accompanying appendix tables. Note: Watch when interpreting the percent changes shown on the appendix tables–they are median percent changes not the percent change in medians. For more about this, see my blog posting here.

 

By Cheryl Russell, editorial director, New Strategist Publications. If you have questions or comments about the above editorial, contact demographics@newstrategist.com.

BET YOU DIDN’T KNOW

Percentage of households buying gasoline during an average week by region…

South: 71%
Midwest: 68%
West: 67%
Northeast: 63%

Source: American Buyers: Demographics of Shopping

2. Q & A

What Is the Census Surprise?

 

The 2010 census counted 3 million fewer non-Hispanic whites than the Census Bureau had estimated. This is the biggest surprise so far to emerge from the 2010 census. The nation is no longer about to transform into a multicultural melting pot, it already has. According to the Census Bureau’s most recent estimates, the nation was supposed to have 200 million non-Hispanic whites, accounting for 65.1 percent of the total population. But the census counted 197 million non-Hispanic whites, only 63.7 percent of the population. In 2000, non-Hispanic whites were 69.1 percent of the U.S. population.

 

Between 2000 and 2010, the number of non-Hispanic whites increased by just 1.2 percent. This compares with 43 percent growth in the Asian (alone) population and an identical 43 percent growth in the Hispanic population. The multiracial population grew 32 percent. Within the multiracial population, the number of people who identified themselves as black andwhite more than doubled between 2000 and 2010, climbing from 785,000 to 1.8 million. This racial combination accounted for nearly half the increase in the multiracial population.

 

This is a big change from 2000. In that year, the black/white combination accounted for only 11 percent of the total multiracial population. It was greatly outnumbered by white/other (many “others” were Hispanics who were unaware that Hispanic is an ethnicity rather than a race), white/Asian, and white/American Indian.

 

The story is different in 2010. The black/white group has surged ahead of all the others and now accounts for 20 percent of the total multiracial population. Why? Call it the Obama Effect. The nation’s first multiracial president has boosted the popularity of asserting a multiracial identity, particularly the black/white combination. It is likely that many of those doing the asserting are parents of children under age 18. As of 2009, the median age of the multiracial population was just 20, well below the median age of 37 for all Americans. We do not yet know the age distribution of the multiracial in 2010, but it is likely to be much more youthful than the general population. That’s because, when answering the census, parents supply the information for children under age 18, including racial identification. Many parents identify their children as multiracial (and increasingly so), but when those children become adults they may choose to adopt a single-race identification. Unless, that is, the Obama Effect permanently changes racial identification in the United States.

 

By Cheryl Russell, editorial director, New Strategist Publications. If you have any questions or comments about the above Q & A, contact demographics@newstrategist.com.

BET YOU DIDN’T KNOW

Annual amount spent by the average household on cable or satellite television services: $584.

Source: Household Spending: Who Spends How Much on What, 15th edition

3. Cool Research Links

To keep up-to-date on ever-changing demographics and lifestyles, check out these useful links.

2011 Retirement Survey
It’s that time of year again. Every spring since 1996, the Employee Benefit Research Institute has released the always fascinating results of its Retirement Confidence Survey. The 2011 survey shows workers having little confidence in their ability to afford a comfortable retirement. Just 13 percent feel “very” confident this year, down from an all-time high of 27 percent in 2007. Still, at the other extreme, only 27 percent of workers say they are “not at all” confident in having enough money to live comfortably in retirement. Although this is the largest proportion who lack confidence ever recorded by the survey, it is still surprisingly small.

2010 General Social Survey
Results of the 2010 General Social Survey (GSS) are now available for extraction at the U.C. Berkeley Survey Documentation and Analysis web site. Although the site can be a bit intimidating, once you figure it out you can plumb the depths of the GSS back to 1972 and examine them by a range of demographic characteristics. Here is one of the findings: the percentage of people aged 18 or older who agree with the statement, “The way things are in America, people like me and my family have a good chance of improving our standard of living,” fell from 77 to 58 percent between 2000 and 2010.

2010 Yearbook of Immigration Statistics
The latest statistics on legal immigration to the United States are now available at this link. Despite the Great Recession, the number of people obtaining legal permanent resident status (legally immigrating) surpassed 1 million again in 2010–the sixth year in a row in which more than 1 million legal immigrants have come to the United States. The three countries sending the largest number of legal immigrants to the United States: Mexico, China, and India. The three states receiving the largest number of legal immigrants: California, New York, and Florida.

BET YOU DIDN’T KNOW

Best customers of margarine: Householders aged 65 or older.

Source: Best Customers, 7th edition

4. Find out how American Consumers Spend their Money

Consumers have been cutting their spending, making it vital to get the answers to Who buys? What do they buy? How much do they spend? And, most importantly, what will they cut next as their incomes fall and expenses rise?

  • American Buyers: Demographics of Shopping is a groundbreaking new guide to buying patterns, essential information in these difficult economic times. Its weekly and quarterly spending data show you how many households buy certain products and services and how much buyers pay for them, all broken down by age, household income, household type, race and Hispanic origin, region of residence, and education.
  • Starting a new business? Repositioning your products? In the new 15th edition of the annually updated Household Spending: Who Spends How Much on What, you get dollar-for-dollar answers to who is buying hundreds of products and services ranging from laundry detergent and phone cards to motorcycles, wine, and restaurant meals.
  • Best Customers: Demographics of Consumer Demand, 7th ed., is a unique guide to how changing demographics are reshaping the consumer marketplace. Find out who spends the most and who controls market share–often surprisingly different–for over 300 products and services.
  • The 14 volumes in the Who’s Buying Series, which can be purchased individually or as a set, give you the big picture about consumer spending by age, income, household type, race, Hispanic origin, region of residence, and education. Each volume focuses on an individual product category, ranging from apparel and beverages to restaurants, consumer electronics, and travel.

For your convenience, New Strategist’s titles are available as searchable single- and multiple-user pdfs that are linked to spreadsheets of all the data tables in each book so you can do your own analyses and create PowerPoint presentations.

BET YOU DIDN’T KNOW

Householders aged 55 to 64 spend more than any other age group on eyeglasses and contact lenses–38 percent more than the average household.

Source: Who’s Buying Health Care, 7th edition