American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
November 2006

It Is the Economy, Stupid

1. Hot Trends: IT IS THE ECONOMY, STUPID
2. Q & A: DO HALF OF MARRIAGES END IN DIVORCE?
3. Cool Research Links: STATE AND METROPOLITAN AREA DATA BOOK, KAISER HEALTH SURVEYS
4. New for Fall 2006: The all new AMERICAN SEXUAL BEHAVIOR, and updates of BEST CUSTOMERS, HOUSEHOLD SPENDING, and the popular WHO’S BUYING REPORTS

 

BET YOU DIDN’T KNOW

The average household spends $310 on car payments each month, with the figure peaking at $568 among married couples with adult children at home.

1. HOT TRENDS

It Is the Economy, Stupid

The economy ranked third as a concern on voters’ minds in last week’s midterm election, according to CNN exit polls. Thirty-nine percent of voters said the economy was extremely important to their vote. This share was close behind the 40 percent who named terrorism and the 42 percent who cited corruption (more than one issue could be mentioned).

Although the economy is looking good by traditional measures, many voters apparently disagree. Among those who said the economy was extremely important to their vote, the 59 percent majority voted for the Democratic congressional candidate. (For CNN exit poll results, see http://www.cnn.com/ELECTION/2006/pages/results/states/US/H/ 00/epolls.0.html.)

Clearly, a good chunk of Middle America is feeling financially insecure, and the reasons for the insecurity are not so hard to determine. Although the stock market is close to a record high, fewer than half of households own stock, and those that do own very little. The unemployment rate, too, is not a good barometer of economic security when wages are barely keeping pace with inflation. Instead, these are the economic indicators that are likely to have influenced the votes of Middle America last week:

1. Housing prices. Housing equity is the single most important asset for the average household, accounting for 32 percent of net worth, according to the Federal Reserve Board’s Survey of Consumer Finances. Housing prices have been falling for the past few months, and Middle America is feeling anxious. In September 2006, the National Association of Realtors reported that the price of existing homes fell to $220,000, down from $225,000 in September of 2005–a 2.2 percent decline and the largest year-to-year drop on record. Voters expressed their economic anxiety in the voting booth.

2. Interest rates. If you rank the items on which the average household spends the most, the cost of two of the top five are driven by interest rates: vehicles and mortgages. Car payments rank second among household budget items (after food). Mortgage interest payments rank fourth (after Social Security deductions in third place). Rising interest rates mean higher payments, if not right away then with the next move or car purchase.

3. Gasoline prices. Gasoline is the fifth-largest item in the household budget of Middle America. The average household spent $1,598 on gasoline in 2004 and that was before gas prices rose to record levels. Although the price of gasoline has fallen from its peak, Middle Americans know it could rise again. In fact, they expect it. The ongoing turmoil in Iraq guarantees volatility in oil prices.

4. Health insurance. The out-of-pocket cost of health insurance ranks eighth among the items on which the average household spends the most. In 2004, the average household spent $1,332 out-of-pocket on health insurance 24 percent more than in 2000, after adjusting for inflation. With this expense rising in a seemingly out-of-control upward spiral, Middle America fears it cannot keep up and knows it is only a pink slip away from not having any insurance at all.

5. Social Security. The average household spends more on Social Security, through automatic payroll deduction, than any other budget item except food and car payments. Despite its steep personal cost, the public views Social Security as a necessary expense for ensuring some measure of economic security in retirement. Among the nation’s workers, Social Security ranks second as the largest expected source of income in retirement behind only personal savings (and well ahead of 401(k) plans), according to the Employee Benefit Research Institute’s Retirement Confidence Survey. When politicians suggest privatizing Social Security, Middle America feels threatened.

6. College costs. Middle America wants a better life for its children. That is the American Dream. Getting a college education is one of the surest routes to achieving the American Dream. But with college tuition rising much faster than incomes up 36 percent between 2000 and 2004, after adjusting for inflation many wonder whether their children (or grandchildren) will be able to achieve the Dream. Middle America voted accordingly. Among the 30 percent of voters who think life for the next generation will be better, the 62 percent majority voted for the Republican congressional representative, according to exit polls. But for the larger 40 percent who think life for the next generation will be worse, the 66 percent majority voted for the Democratic candidate.

For more on the spending priorities of American households, see New Strategist’s just updated 11th edition of Household Spending: Who Spends How Much on What and the 4th edition of Best Customers: The Demographics of Consumer Demand. Visit New Strategist’s web site at http://www.newstrategist.com to order hardcopies or download these books today.

By Cheryl Russell, editorial director, New Strategist Publications
If you have any questions or comments about the above editorial, e-mail New Strategist at mailto:demographics@newstrategist.com.

 

BET YOU DIDN’T KNOW

Householders aged 65 to 74 are the biggest contributors to political organizations, spending more than twice the average on this item.

2. Q & A

Do Half of Marriages End in Divorce?

Once upon a time, the National Center for Health Statistics collected and published statistics on marriage and divorce. Its researchers calculated marriage and divorce rates, determined the percentage of marriages ending in divorce, and contributed greatly to our understanding of this important milestone in the lives of most Americans. But that worthy effort came to an unfortunate halt ten years ago due to limitations in the data collected by states and tighter federal budgets.

The NCHS marriage and divorce reports are greatly missed. Pundits and politicians have filled the statistical vacuum, pontificating on the topic with little factual information. For those who want the facts, the only place to turn is occasional studies done by the Census Bureau’s Survey of Income and Program Participation or the National Center for Health Statistics’ National Survey of Family Growth. The NSFG, taken every five years or so, is a survey of the sexual and family formation behavior of the nation’s 15-to-44 year olds. The latest NSFG survey, taken in 2002, can answer the question of how many marriages end in divorce. And the answer is, it depends.

The likelihood of divorce depends on when you were born, how young you were when you married, your educational level, and even the type of family in which you were raised. Among ever-married women aged 15 to 44 in 2002, a substantial 35 percent had seen their first marriage end in divorce. But this figure ranged from a whopping 63 percent for those who married before age 18 to just 22 percent for those who married at age 23 or older. The percentage of women divorced from their first husband was as high as 45 percent for those with only a high school education to just 20 percent for college graduates. Among ever-married women raised in a two-parent family, only 32 percent had divorced from their first husband. Among those raised in other types of families, a larger 44 percent had divorced.

Although divorce is widespread, most Americans are ambivalent about it. When 15-to-44- year-olds were asked whether divorce is the best solution when a couple cannot work out its marriage problems, only 44 percent of men and 47 percent of women agreed.

For more NSFG results detailing the sexual, reproductive, and family formation behavior of American men and women, see the all new American Sexual Behavior: Demographics of Sexual Activity, Fertility, and Childbearing. Visit New Strategist’s web site at http://www.newstrategist.com to order hardcopies or download this book today.

If you have any questions or comments about the above Q & A, e-mail New Strategist at mailto:demographics@newstrategist.com.

 

BET YOU DIDN’T KNOW

Sixty percent of Catholic women aged 15 to 44 are currently using contraception.

3. COOL RESEARCH LINKS

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

State and Metropolitan Area Data Book: 2006
http://www.census.gov/compendia/smadb/
Before the era of the Internet, the State and Metropolitan Area Data Book was an eagerly anticipated compendium of facts. Published every few years beginning in 1979, it offered local area demographic and economic data not easily accessible elsewhere. The 2006 edition updates the previous volume published in 199798. Since publication of the earlier edition, the State and Metropolitan Area Data Book has been upstaged not only by easy access to government data online, but also by the new American Community Survey–which updates state and metropolitan area demographic data every year. But the State and Metropolitan Area Data Book still has much to offer. Not only does it include data not collected by the American Community Survey, but it puts all the facts together in one handy volume. At the state level, the facts range from population and land area to seat belt use and the composition of Congress. The State and Metropolitan Area Data Book invites browsing, which helps generate ideas for new businesses or research papers. It is free as a download or pay $47 for the hardcopy.

Kaiser Polls on Health Care
http://www.kff.org/kaiserpolls/
There is no better way to stay on top of the public’s attitude toward health care than through the Kaiser polls, accessible at this site. The Kaiser Family Foundation surveys public opinion on health issues every other month, examining the importance of health care among issues and the public’s perception of health care quality, the Medicare prescription drug plan, employer health benefits, and much more. The September poll found 54 percent of the public dissatisfied with the quality of health care in the United States, and 80 percent dissatisfied with the cost. Fifty-two percent say the uninsured are a critical problem facing our country. Among those with private health insurance, 56 percent worry they will lose coverage because of a job loss. Fifty-six percent support a universal health insurance program over the current system. The Kaiser Health Poll Search allows users to sort through more than 60,000 health-related questions organized by topic.

 

BET YOU DIDN’T KNOW

The average household pays $286 per month in Social Security taxes and $127 per month in federal income taxes.

4. NEW FOR FALL 2006

NEW TITLE: American Sexual Behavior: Demographics of Sexual Activity, Fertility, and Childbearing is a groundbreaking new title that brings you the facts about reproductive health and family formation in the United States. Its eleven chapters cover sexual initiation and orientation, AIDS and STDs, cohabitation and marriage, fertility and infertility, pregnancy, births, caring for children, and much more. ($89.95; ISBN 978-1-933588-09-4)

NEW EDITION: The fourth edition of Best Customers: Demographics of Consumer Demand reveals the best customers for hundreds of products and services ranging from alcoholic beverages to gasoline, bedroom linens, and cell phone service. It identifies which households spend the most on a product or service and which control the largest share of spending. ($89.95; ISBN 978-1-933588-06-3

NEW EDITION: The eleventh edition of the annual Household Spending: Who Spends How Much on What gives you detailed analyses of consumer spending on hundreds of products and services by the demographics that count–age, income, household type, region of residence, race and Hispanic origin, and education. The book begins with an overview chapter, then goes on to examine spending on apparel, entertainment, financial products and services, food and beverages, gifts, health care, household operations, shelter and utilities, transportation, personal care, reading, education, and tobacco. ($94.95; ISBN 978-1-933588-05-6)

NEW EDITIONS: The updated Who’s Buying Series, which is based on the new eleventh edition of Household Spending, gives you even more demographic detail about how much Americans spend by the demographics that count–age, income, household type, race and Hispanic origin, region of residence, and education. To round out the spending picture, you also get “who are the best customers” analyses of the data.

  • Who’s Buying Apparel, 2nd ed. ($59.95; ISBN 1-978-933588-08-7)
  • Who’s Buying Alcoholic and Nonalcoholic Beverages, 3rd ed. ($59.95; ISBN 1-978-933588-11-7)
  • Who’s Buying Entertainment, 3rd ed. ($59.95; ISBN 1-978-933588-12-4)
  • Who’s Buying Groceries, 4th ed. ($59.95; ISBN 1-978-933588-13-1)
  • Who’s Buying Heath Care, 3rd ed. ($49.95; ISBN 1-978-933588-14-8)
  • Who’s Buying Household Furnishings, Services, and Supplies, 4th ed. ($59.95; ISBN 1-978-933588-15-5)
  • Who’s Buying Information, 3rd ed. ($59.95; ISBN 1-978-933588-08-7)
  • Who’s Buying for Pets, 4th ed. ($49.95; ISBN 1-978-933588-17-9)
  • Who’s Buying by Race and Hispanic Origin, 2nd ed. ($59.95; ISBN 1-978-933588-18-6)
  • Who’s Buying at Restaurants and Carry-Outs, 4th ed. ($49.95; ISBN 1-978-933588-19-3)
  • Who’s Buying Transportation, 3rd ed. ($59.95; ISBN 1-978-933588-20-9)
  • Who’s Buying for Travel, 3rd ed. ($49.95; ISBN 1-978-933588-21-6)
  • Who’s Buying: Executive Summary of Household Spending, 2nd ed. ($59.95; ISBN 1-978-933588-22-3)

You can order online (where you can also see tables of contents and sample pages) at http://www.newstrategist.com. Or call toll free 800/848-0842 (or 607/273-0913), fax your order to 607/277-5009, or mail your order to New Strategist Publications, P.O. Box 242, Ithaca, NY 14851.

 

BET YOU DIDN’T KNOW
More than 6 million American women become pregnant each year. Only 63 percent of those pregnancies end in a live birth.