American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
March 2008

Last of the Big Spenders

4. New from New Strategist: WHO ARE YOUR BEST CUSTOMERS?

1. Hot Trends

Last of the Big Spenders

“Consumers stopped buying pretty much everything,” commented the Associated Press in a recent news story about the 0.6 percent decline in February retail sales. This bit of hyperbole about the $380 billion Americans spent at retailers last month is yet another example of the abysmal quality of reporting on trends in the consumer marketplace.

To put it bluntly, reporters just do not get it. They err–out of confusion or laziness–when they explain macroeconomic trends as if those trends describe the behavior of you and your neighbors. It is called anthropomorphizing, and it can be a harmless way of putting a human face on dry statistics. Not in this case. By anthropomorphizing macroeconomic trends, reporters are misleading the public about the real dynamics of the consumer marketplace.

For years, the people who bring us the news have been telling us what big spenders we are, when all along we have been cautious consumers. Now they are telling us what scrooges we are, when we are the same cautious consumers we have always been. How did reporters get so far off track?

It all started decades ago with the rise in personal consumption expenditures (PCE), a macroeconomic indicator. PCE is one of those dry statistics-the sum of all spending on consumer products and services in the United States. Between 1984 and 2006, PCE more than doubled after adjusting for inflation. Rather than explain the real reasons for the rapid growth in PCE, reporters simply anthropomorphized the trend and called Americans big spenders. In fact, average household spending grew by only 14 percent between 1984 and 2006, after adjusting for inflation–less even than the gain in real median household income. And the spending of baby boomers (the ones usually accused of being the most profligate spenders) increased by an even smaller 4 percent, according to the Consumer Expenditure Survey. This modest rise in spending is even more impressive when you consider the 59 percent increase in the price of a new single-family home during those years, the 100 percent increase in the cost of college, or the 101 percent increase in out-of-pocket health insurance expenses

Clearly, the average American has been pinching pennies all along. What accounts, then, for the ballooning PCE? To answer the question, reporters needed to look under the hood of the macroeconomic trends and discover what drove the engine. If they had bothered to look, here is what they would have found:

The population is growing. The United States is one of the fastest growing developed countries in the world, so it is only natural that aggregate consumer spending will rise each year along with the population. This does not mean you and your neighbors are spending more, however.

Boomers filled the peak spending life stage. Over the past two decades the enormous baby-boom generation filled the 35-to-54 age group, the peak spending years. Consequently, the number of affluent households reached record levels, the housing market exploded, and the nation’s aggregate spending soared–even as individual households held their spending in check.

The price of stuff plummeted. The average American home has multiple television sets, closets full of clothes, and a kitchen full of appliances. Americans have more stuff because stuff is cheap. Televisions, video recorders, microwaves, dishwashers, computers, cameras–if the product uses an electrical cord or a battery, chances are it costs a fraction of what it did two decades ago. Television sets, for example, cost 85 percent less than they did in the 1980s. Falling prices have affected more than electronics. Toys cost 32 percent less, and clothing is less expensive. Just because we have more does not mean we are spending more.

Credit card payments ballooned. Consumer borrowing has grown handily over the years, but not because the average American is drowning in debt. Consumers are paying with plastic as a convenience, not an easy-money scheme. According to a Pew Research Center survey, just 31 percent of consumers carry a balance on their credit card bill. Among those who carry a balance, the median amount owed is a modest $2,200, reports the Federal Reserve Board’s Survey of Consumer Finances.

The real story behind consumer spending is this: Americans did not spend foolishly when times were good. And their skill at pinching pennies may help soften the landing in the bad times that lie ahead.

By Cheryl Russell, editorial director, New Strategist Publications
If you have any questions or comments about the above editorial, e-mail New Strategist at



Percent change in average annual household spending on groceries, 1984 to 2005 (after adjusting for inflation): -11.

2. Q & A

What is Wrong with Young People?

By now everyone has heard that teenagers and young adults do not know much about history, cannot locate Ohio on a map, and spend way too much time texting when they should be doing more important things–like listening to their elders lecture them about their many shortcomings.

Who can blame them for not listening? For some reason, it is always the young–not the old–who are being told of their failings. The old have been complaining about the young since time immemorial. But turnabout is fair play, so let’s explore for a moment whether older Americans are as wise and industrious as they pretend to be. Here are three stories about old folks that could be in the news:

Glued to the Tube: Why Can’t the Elderly Find Something Better to Do?

Results from a national survey reveal that older Americans have a serious addiction to television. The latest American Time Use Survey shows that people aged 65 or older spend one-fourth of their waking hours watching television as their primary activity, far more than any other age group. People aged 65 to 74 spend 3.83 hours a day watching TV. For those aged 75 or older, the figure is an even larger 4.18 hours–twice as much time as young adults spend watching TV. For expert advice on what is behind this potentially harmful addiction to television, we turn to–

Technophobes: Irrational Fear Grips Older Americans as Times Change

Health experts have detected a new syndrome infecting Americans aged 55 and older. The syndrome manifests itself as a fear of pushing buttons and prevents millions from adopting modern conveniences such as cell phones, computers, and the Internet. With nearly every young adult online and using a cell phone, the young are increasingly frustrated and alarmed at the unwillingness of the older generations to communicate with them. “What’s up?” ask young people. Only 37 percent of people aged 65 or older are online, according to Pew Internet & American Life Project. Cell phone ownership is also abysmally low in the age group. Psychologists have so far been unable to explain–

Whoa! Say Older Adults– Why They Impede Scientific Progress

A new study reveals that older Americans are wary of science. According to results of the 2006 General Social Survey, most people aged 60 or older agree with the statement, “Science makes our way of life change too fast.” A much smaller 40 percent of young adults agree. What is behind the attitude gap? Some say education, since young adults are much better educated than older Americans. Most young adults have been to college, while few older Americans have any college experience. Yet, because of their high voting rate, older generations determine science funding in the United States. The only way to resolve this conflict–

These stories are just as newsworthy as the ones detailing the failures of young adults, but you won’t see them in the news anytime soon. Why? Because older generations, not young adults, decide what makes the news.

By Cheryl Russell, editorial director, New Strategist Publications If you have any questions or comments about the above Q & A, e-mail New Strategist at



Percent change in average annual household spending on women’s clothes, 1984 to 2005 (after adjusting for inflation): -24.

3. Cool Research Links

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

County and City Data Book: 2007
Which county is growing the fastest? Which one has the most crime? You can find out at this site, where you can access the County and City Data Book: 2007 for population, housing, and business data for counties, cities, and places. While the Census Bureau’s American Community Survey updates some of the statistics annually, much of the data come from other sources–making this a particularly valuable compendium of local information.

Maternity Leave
This Census Bureau report, Maternity Leave and Employment Patterns, 1961-2003, provides the most comprehensive data available on women’s labor force participation before and after giving birth. Here is one nugget that reveals how times have changed: The percentage of mothers who are back at work within twelve months of giving birth climbed from just 17 percent in the early 1960s to 64 percent in 2000-02.



Percent change in average annual household spending on furniture, 1985 to 2005 (after adjusting for inflation): -8.


As a recession looms over the United States, getting accurate, agenda-free answers to how much consumers spend and what they spend it on is key to generating successful new products, developing winning marketing plans, and creating innovative policies.

You can get those answers from these New Strategist titles:

  • Household Spending: Who Spends How Much on What, 12th ed. (ISBN 978-1-933588-29-2) If Americans buy it, you can probably find out how much they spend on it in Household Spending, which gives you spending answers for hundreds of products by the demographics that count–age, income, household type, high-income households, region of residence, race and Hispanic origin, and education. The book’s eleven chapters examine everything a household might buy, from laundry detergent and milk to big-ticket items like homes and cars. Household Spending is available in print and in a searchable pdf linked to spreadsheets for every table in the book.

Download the pdf and/or get the book. Or download the pdf for use by your entire company by getting a site license. All are available at New Strategist’s web site.

  • The Who’s Buying Series. These fourteen indispensable guides, which can be purchased singly or as a discounted package, detail the spending of both the biggest customers–those who control the greatest market share–and the best customers–those who spend the most. They are not always the same. Each volume brings you the numbers along with “who-are-the-best-customers” analyses of the data, showing at a glance the demographics of household spending, product by product.
  • Who’s Buying Apparel, 3rd ed. (978-1-933588-55-1) Who buys apparel and shoes for infants, boys and girls, men and women, plus jewelry, watches, sewing materials, laundering and dry cleaning.
  • Who’s Buying Alcoholic and Nonalcoholic Beverages, 4th ed. (978-1-933588-54-4) Who buys beer, wine, whiskey, and other alcoholic beverages at home, on trips, and at restaurants and bars. Also who buys colas, coffee and tea, fruit-flavored drinks, milk, etc., at grocery and convenience stores.
  • Who’s Buying Entertainment, 4th ed. (978-1-933588-56-8) Who buys sports and photographic equipment, sound components and TVs, videogames, movie and theater tickets, and much more.
  • Who’s Buying Groceries, 5th ed. (978-1-933588-57-5) How much Americans spend on food for home consumption. The 84 items range from bacon and instant coffee to frozen vegetables and steak.
  • Who’s Buying Health Care, 4th ed. (978-1-93358858-2) Who is spending out-of-pocket on health insurance, medical services, drugs, vitamins, eyeglasses and contact lenses, etc.
  • Who’s Buying Household Furnishings, Services, and Supplies, 5th ed. (978-1-933588-59-9) Who is buying furniture, rugs, sheets and towels, refrigerators, day care, lawn care, stationery, etc.
  • Who’s Buying Information Products and Services, 4th ed. (978-1-933588-60-5) Who buys computers, books, newspapers, telephone service, televisions, etc.
  • Who’s Buying for Pets, 5th ed. (978-1-933588-61-2) Who buys pet food, supplies and medicine, veterinary services, etc.
  • Who’s Buying at Restaurants and Carry-Outs, 5th ed. (978-1-933588-62-9) Who buys breakfast, brunch, lunch, dinner, and snacks at fast and full-service restaurants, vending machines, school and work cafeterias.
  • Who’s Buying Transportation, 4th ed. (978-1-933588-63-6) Who buys new and used cars and trucks, gasoline and motor oil, public transportation, vehicle insurance, vehicle maintenance, etc.
  • Who’s Buying for Travel, 4th ed. (978-1-933588-64-3) Who buys airline and ship fares, luggage, lodging, food, alcohol, auto rental, and recreational expenses on trips, etc.
  • Who’s Buying by Age, 2nd ed. (978-1-933588-51-3) The only published source for weekly and quarterly spending data on what households buy and how much they spend, and also how often they buy certain items.
  • Who’s Buying by Race and Hispanic Origin, 3rd ed. (978-1-933588-53-7) The demographics of spending by race and Hispanic origin on hundreds of products and services in ten major categories ranging from apparel to transportation.
  • Who’s Buying: Executive Summary of Household Spending, 3rd ed. (978-1-933588-52-0) A broad overview of spending that provides insights into consumer spending patterns and how those patterns differ by demographic characteristic.

Download the pdf and/or get the book. Or download the pdf for use by your entire company by getting a site license. All are available at New Strategist’s web site.