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The Inflation Problem

04/17/12

 

April 17, 2012 

American Consumers Newsletter
by Cheryl Russell, 
Editorial Director, New Strategist Publications
 


IN THIS ISSUE:

1. Hot Trends: THE INFLATION PROBLEM, THE AGE OF HOUSING STOCK, FAT DEMOGRAPHICS and much more
2. 
Q & A:  WHEN WILL BOOMERS RETIRE? 
3. 
Cool Links:  
METRO ESTIMATES 2011, COUNTY HEALTH RANKINGS, ASIAN POPULATION 2010
4. Updated Reference Tools: AMERICAN INCOMES, HOUSEHOLD SPENDING, BEST CUSTOMERS, 14 WHO'S
BUYING REPORTS

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

  
1. Hot Trends  

 

The Inflation Problem  

Research has shown that financial know-how peaks in middle age--at an average age of 53, according to one study--and declines with age. Most of the research focuses on the vulnerability of aging Americans to financial scams. But there is another perhaps equally serious problem that arises from declining financial sophistication: the inability or refusal of many older Americans to understand or account for inflation.

 

Here is an example from a column published in a local newspaper in my area, written by a retiree with a Ph.D. no less: "If you ordered a beer at Yankee Stadium during the 1949 World Series, it sold for 35 cents. Pretty nice price, by 2012 standards at least." No, the price isn't nice. Beer is cheaper today than it was in 1949 after adjusting for inflation. Thirty-five cents in 1949 is the same as $3.35 today. You can easily buy a beer at a bar or restaurant for less than $3.35.

 

The inability or refusal of many older Americans to understand and adjust for inflation may play a role in the outsized anger of the gray-haired crowd toward government spending. Without factoring in inflation, everything seems to be getting more expensive, services appear too costly, wages look excessive. It's not much of a leap from that kind of thinking to, "I'm mad as hell and I'm not going to take it anymore!" Could blinkered thinking about inflation explain a lot of the crazy--such as the recent vote by the Senate Commerce and Tourism Committee in the nation's oldest state (Florida) to lower the hourly minimum wage for tipped workers from $4.65 to $2.13? The government's inflation calculator is here. Bookmark it.

 

Housing Stock: Year Built

Despite the flurry of construction during the housing bubble, the percentage of the nation's 132 million housing units that were built between 2000 and 2010 is only slightly greater than the percentage built during the 1980s and 1990s, according to the Census Bureau's American Community Survey. Take a look at the distribution of the nation's housing units by the decade they were built...

 

2000s: 14.8%

1990s: 13.9%

1980s: 14.0%

1970s: 16.0%

1960s: 11.1%

1950s: 10.9%

Earlier: 19.2%

 

Prison Happy

Americans are singularly obsessed with imprisonment. No other country puts as many people behind bars. The number of people in custody in the nation's local jails and state or federal prisons more than tripled between 1985 and 2010, growing from 744,208 to 2.3 million, according to the Sourcebook of Criminal Justice Statistics. The rate of imprisonment more than doubled during the time period, climbing from 313 to 731 incarcerations per 100,000 population. 

 

Fat Demographics

The percentage of Americans who are overweight varies surprisingly little by demographic characteristic--meaning the great majority of just about everyone is overweight, according to Obesity in America, an analysis of data collected by the Medical Expenditure Panel Survey. National Center for Health Statistics.

 

Overall, 65 percent of the population aged 20 or older is overweight (a figure that includes the obese). There is almost no demographic segment in which the number of people who are overweight does not greatly surpass the number with a healthy weight. In fact, there are only two demographic segments in which being overweight is not the norm. One segment is "non-Hispanic other/multiple races," a group that includes Asians (48% overweight). The other is the youngest age group, aged 20 to 24 (45% overweight).

 

Whether you are man (72% overweight) or woman (59%), black (72%) or white (65%), middle aged (71%) or old (67%), high school dropout (70%) or college graduate (60%), rich (64%) or poor (66%), chances are you're fat.

 

Decline in Teens Talking on the Phone

Teens are texting more and talking less on the telephone, according to a study by Pew Internet & American Life Project. Only 14 percent of 12-to-17-year-olds talked to friends daily on a landline phone in 2011, down from 30 percent two years earlier. The percentage who talk to friends daily on a cell phone fell from 38 to 26 percent during those years.  

 

The Mystery of a Successful Marriage

What are the ingredients of a successful marriage? According to the National Center for Health Statistics report First Marriages in the United States, one of the most important ingredients--for women at least--is a college degree. Nothing guarantees a successful (i.e. long-lasting) marriage more than having a bachelor's degree. The percentage of women whose first marriage has lasted for 20 years ranges from a low of 39 percent among those who did not graduate from high school to a high of 78 percent among those with a bachelor's degree. The relationship between educational attainment and marital success is weaker for men, but still important, with the figure ranging from a low of 47 percent among men with no more than a high school diploma to a high of 65 percent among men with a bachelor's degree.

 

The answer to this mystery has nothing to do with love and everything to do with money. Increasingly, and almost exclusively, economic success accrues to men with a bachelor's degree. Women who graduate from college are far more likely than less-educated women to meet and marry a man with a college degree. Money--and men's ability to earn it--is the most important ingredient of a successful marriage.

 

Unauthorized Immigrants: 11.5 Million

The number of unauthorized immigrants in the United States changed little between 2010 and 2011, according to new estimates by the Department of Homeland Security. As of January 2011, an estimated 11.5 million unauthorized immigrants were in the country, about the same as the 11.6 million in January 2010 (this figure has been revised upward from 10.8 million based on 2010 census weights). The number of unauthorized immigrants grew 36 percent between 2000 and 2011, from 8,460,000 to 11,510,000.

 

Urban Population Up 12 Percent

Although Americans tend to think of themselves as small town or even rural in character, a look at the Census Bureau's newly released classification of urban and rural populations based on 2010 census data shows how wrong they are. In 2010, fully 80.7 percent of Americans lived in an urban area. Not only are most Americans urban dwellers, but the urban population is growing faster than the rural population. Between 2000 and 2010, the urban population grew 12.1 percent, more than the 9.7 percent national growth rate and far outpacing the 7.3 percent increase in the rural population.

 

Many people use the terms urban and metropolitan interchangeably. In fact, urban is a much more precise definition of city life. Metropolitan areas are broad brush, comprised of groups of counties, many of which contain rural areas. In contrast, urban areas are a far higher resolution of lifestyle, comprised of census tracts or blocks that are home to at least 2,500 people. Once the Census Bureau defines urban areas (which it does every 10 years), rural areas are the remainder. Despite our overwhelming urbanity, many Americans continue to think rural. That may be because 97 percent of the nation's land area is rural. Only 3 percent is urban. But 249 million Americans are crammed into that 3 percent.

 

The Need For Old Buildings 

Character is key to economically vibrant cities, reports

The Atlantic. And what creates character? One necessary feature is old buildings. As urban philosopher Jane Jacobs notes in her masterpiece The Death and Life of Great American Cities:

 

"Old ideas can sometimes use new buildings.  

New ideas must use old buildings."

 

That's because rent is cheap in old, run-down buildings, allowing aspiring entrepreneurs to try out ideas without costly overhead. Cities with old buildings in abundance have opportunities for economic growth that other cities can't match--no matter how much money they spend on new development. As Jacobs explains:

 

"The economic value of new buildings is replaceable in cities. It is replaceable by the spending of more construction money. But the economic value of old buildings is irreplaceable at will. It is created by time."

 

 

Hispanic or Latino?

When asked whether they prefer the term "Hispanic" or "Latino," the 51 percent majority of Hispanics do not have a preference. One-third prefers Hispanic and 14 percent prefer Latino, according to a survey by Pew Hispanic Center.

 

 

These are a sampling of posts published in the past few weeks in Cheryl Russell's Demo Memo blog. Please send questions or comments to demographics@newstrategist.com


BET YOU DIDN'T KNOW

Change in the median value of vehicles owned by the average household, 2007-09, after adjusting for inflation: -26 percent.

   
2. Q & A

 

When Will Boomers Retire?  

Not anytime soon if all goes according to plan. The 51 percent majority of workers aged 55 or older do not expect to retire until age 66 or older. A decade ago, only 28 percent of older workers expected to work that long, according to the 2012 Retirement Confidence Survey. Even after retirement, 70 percent of workers expect to continue to work for pay.

 

That's what boomers say. But what will they do? The MetLife Mature Market Institute has the answers. It has been surveying the oldest boomers every few years since 2007. Born in 1946, those boomers turned 65 in 2011. MetLife's 2011 survey of this cohort reveals the following:

  • 45 percent were fully retired. Among the retirees, the 51 percent majority had to retire sooner than planned--most due to poor health or job loss
  • 24 percent worked full-time 
  • 63 percent were collecting Social Security benefits, starting at an average age of 62.7
  • 23 percent had received an inheritance, averaging $110,000
  • 70 percent have grandchildren and 24 percent have at least one living parent
  • 83 percent do not plan to move
Interestingly, most leading-edge boomers say they like the word "retirement," and they do not think they will be "old" for many more years--until they reach the age of 79.

   

By Cheryl Russell, editorial director, New Strategist Publications. Questions or comments, please contact

demographics@newstrategist.com  

BET YOU DIDN'T KNOW

The best customers of fresh prepared food from the supermarket deli are married couples with school-aged children, spending 52 percent more than the average household on this item. 

Source: Best Customers: Demographics of Consumer Demand
     

 3. Cool Research Links

 

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

 

Metropolitan Population Estimates: 2011 

Metropolitan area population estimates for July 1, 2011 are now available from the Census Bureau at this link. These are the first estimates of metropolitan populations since the 2010 census. They show slowing growth in many metropolitan areas that once were growing rapidly, according to the bureau. Of the 50 fastest-growing metros between 2000 and 2010, only 24 were on the list in the 2010-11 time period. That said, there is much inertia in demographic change, and many areas supposedly devastated by the Great Recession and the collapse of the housing bubble are still growing impressively such as Miami (31st in percent growth between 2010 and 2011), Riverside (58th), and Atlanta (61st). Even Las Vegas continues to grow. 

  

County Health Rankings 

Usually, rankings of health status by geography are minimally interesting or useful. That's because demographics, not geographics, determine health. The data at this site are different because they lift the veil on the socioeconomic characteristics that determine health. The interactive features of the site let you compare the health of counties in a state and see the characteristics that determine each county's health status. For example, Allendale County ranks worst in health among South Carolina's counties. Residents of Allendale are almost three times more likely than the average American to die prematurely--that is, before age 75. The characteristics of Allendale are those linked to poor health: a low level of education, 25 percent without health insurance, 19 percent unemployed, and every restaurant a fast-food establishment. 

  

The Asian Population: 2010 

  
BET YOU DIDN'T KNOW

Pets rank 22nd among the items on which the average household spends the most. The average household spends more on pets than retirement savings or alcoholic beverages.

      
4. Meet Your Customers   

 

Who buys? What do they buy? How much do they spend?

Get the dollar-for-dollar answers you need to succeed in today's tough economy from these one-stop resources

 

The annual spending data in Household Spending: Who Spends How Much on What, the first edition of which was published in 1991, allow you to compare and contrast spending by a host of demographic characteristics so you can determine market potential and the dollar size of each market, identify your best customers, and understand which segments account for the largest share of spending. New to the 16th edition are intriguing results of how the nation's spending habits have changed because of the Great Recession, with comparisons of spending trends between 2000-06 and 2006-09.

 

American Incomes: Demographics of Who Has Money has the 2010 income data you need to stay competitive in an unpredictable economy. It is a one-stop resource for understanding the economic status of Americans--how the incomes of men and women are changing, which households have money left over after paying for necessities (valuable discretionary income figures calculated just for this book), who is wealthy, and who is poor. New to the 8th edition are detailed estimates that show trends in discretionary income and spending. And the chapter on wealth shows the effects of the Great Recession on household assets and debt.

 

In the new 8th edition of Best Customers: Demographics of Consumer Demand, experts and novices alike can see at a glance who spends the most and who controls the largest market share--often surprisingly different--on over 300 products and services organized into 21 chapters that focus on entertainment, groceries, transportation etc.--everything a consumer might buy. Based on unpublished data--you can't find this on the Internet--from the Bureau of Labor Statistics' invaluable Consumer Expenditure Survey, Best Customers brings you insight into household spending by householder age, income, household type, race and Hispanic origin of householder, region of residence, and educational attainment.

 

The 14 volumes in the new Who's Buying Series, which can be purchased individually or as a set, gives you the big picture about consumer spending by age, income, household type, race and Hispanic origin of householder, region of residence, and education. Each volume focuses on an individual product category, ranging from apparel and beverages to restaurants, consumer electronics, and travel. To round out the spending picture, you also get who-are-the-best-customers analyses of the data. New to these editions are valuable detailed comparisons of spending before (2000-06) and after (2006-09) the Great Recession.


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

BET YOU DIDN'T KNOW

Non-Hispanic whites spend less than the average household on cell phone service.   

Source: Who's Buying Information and Consumer Electronics          
 
 
 



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