American Consumers Newsletter
by Cheryl Russell, Editorial Director, New Strategist Press
Why Don’t Young Adults Move?
1. Hot Trends: WHY DON’T YOUNG ADULTS MOVE? NON-HISPANIC WHITE WORKERS WILL DECLINE, BIRTHS CONTINUE TO SLIDE, and much more
2. Q & A: HOW BIG A PROBLEM IS STUDENT DEBT?
3. Cool Links: 2012 RETIREMENT SURVEY, INCOME OF POPULATION 55+, HOMEOWNERSHIP IN 2011
4. Updated Reference Tools: AMERICAN INCOMES, HOUSEHOLD SPENDING, BEST CUSTOMERS, 14 WHO’SBUYING REPORTS
To see Cheryl Russell’s Demo Memo blog, click here.
1. Hot Trends
Why Don’t Young Adults Move?
Recently, the New York Times published a controversial op-ed piece that took young adults to task because they do not move as frequently as they once did. “Young Americans have become risk-averse and sedentary,” the authors say, dubbing them the “Go-Nowhere Generation.”
It’s true, young adults are moving less, according to the Census Bureau’s geographic mobility data. Until recently, about 30 percent of people in their twenties moved each year. By 2010-11, the figure had fallen to 24 percent.
The op-ed blames the usual suspects: the Internet and Facebook, as well as a pinch of laziness and a dash of complacency. But there is a much simpler explanation for the decline in the mobility of young adults: it’s the economy, stupid! In particular, unemployment and student loan debt. Never before have the nation’s young adults had to confront this one-two punch. On the one hand, it is difficult for them to find a job and even harder to get a job that pays a living wage. The unemployment rate of 20-to-29-year-olds was a double-digit 12 percent in 2011, according to the Bureau of Labor Statistics. On the other hand, many have student loans, preventing them from hitting the road, taking risks, or starting anew.
No wonder a Pew Research Center study finds so many young adults living in multigenerational households. Among 25-to-34-year-olds, more than one in five (22 percent) are living with their parents or grandparents, says Pew, up from 11 percent in 1980. Among those who live with their parents, the 53 percent majority say their finances are tied up with their parents’ finances. Debt–not the Internet–is preventing millions of young adults from moving out and up.
Non-Hispanic White Workers Will Decline
The civilian labor force is projected to increase by 10 million during the next decade, from 154 million in 2010 to 164 million in 2020, according to the Bureau of Labor Statistics. But the number of non-Hispanic whites in the labor force will decline by a substantial 1,576,000 during the decade. The non-Hispanic white share of the labor force will fall from 68 to 62 percent. Non-Hispanic white men will account for only one in three workers by 2020.
Are Things Changing Too Fast?
Many Americans think so, according to the General Social Survey. Nearly half of adults (49 percent) agree that “science makes our way of life change too fast.” Surprisingly, there are few differences in this attitude by generation…
Gen Xers: 48%
Births Continue Downward Slide
Fewer than 4 million babies were born in the United States between June 2010 and June 2011, according to provisional statistics released by the National Center for Health Statistics. During those 12 months, only 3,978,000 babies were born. This was 2 percent below the number of births in the 12-month period ending in June 2010 and 8 percent below the all-time high of 4,316,233 in 2007.
The fertility rate also fell 2 percent, to 64.4 births per 1,000 women aged 15 to 44. The NCHS notes that the rate of decline appears to be slowing.
The Missing Demographics
“Don’t Expect Consumer Spending to be the Engine of Economic Growth It Once Was.” That is the title of an article published recently by the Federal Reserve Bank of St. Louis. The author, an economist, examines the importance of consumer spending to the economy and identifies five trends that will inhibit a consumer spending comeback:
- Lower wealth
- Stagnant incomes
- Tight credit
- Fragile confidence
- Looming reversal of stimulus
Housing Market Projections
Finally, a demographic analysis of the future of the housing market. A study by the Urban Institute summarizes the demographic trends that will impact the still unfolding housing crisis and projects the number of homeowners and renters by age to 2030. Some of the key demographic trends…
- Older Americans will contribute increasingly to housing supply “Just as the Baby Boom will swell the number of seniors in the next two decades, it will also swell the number of dwellings released into the housing market over the next four decades,” the authors note.
- The Millennial generation will drive the housing market for the next two decades “The volume of housing demand over the next 20 years, especially for owner-occupied housing, will depend heavily on the economic and housing policy environment that confronts Echo Boomers as they mature from young adulthood into middle age,” say the authors.
The study projects the number of total households, owners, and renters by age for the 2010 to 2030 time period in three growth scenarios–low, medium, and high. The homeownership rate in 2020 ranges from a low of 63.1 percent to a high of 65.4 percent (from 65.1 percent in 2010). The number of homeowners in 2020 ranges from a low of 79.8 million to a high of 86.0 million (from 76.0 million in 2010). The number of renters ranges more narrowly from 45.6 million to 46.6 million (from 40.7 million in 2010).
Smartphones Now Dominate
Smartphones are now owned by the plurality of American adults, according to a survey by Pew Internet & American Life Project. In February 2012, 46 percent of adults owned a smartphone–up from 35 percent in May 2011. A smaller 41 percent own a cell phone that is not a smartphone (down from 48 percent last May), and 12 percent do not own any kind of cell phone (down from 17 percent last May). Smartphones are owned by the majority of people with household incomes of $75,000 or more and by the majority of those with at least some college education. Most adults under age 45 own a smartphone. Here are the percentages by age…
Self-Employment Drops to New Low
Self-employment in the United States fell to a new low in 2011, according to the Bureau of Labor Statistics. Only 6.8 percent of workers (a figure that includes agricultural and non-agricultural) were self-employed in 2011, down from 7.0 percent in 2010 and 7.3 percent in 2000.
College Degree Not Required
Of the 55 million job openings projected for the labor force during the next decade, according to the Bureau of Labor Statistics, fully 80 percent will not require a bachelor’s degree.
Who Has a Tattoo?
One in five Americans aged 18 or older has a tattoo, according to a Harris poll. This figure is up substantially from the 14 percent with a tattoo in 2008. Not surprisingly, the young are more likely than the old to have a tattoo. Here are the percentages with a tattoo by age…
2. Q & A
How Big a Problem Is Student Debt?
Very big. So big, in fact, that the Federal Reserve Bank of New York has begun to track the burden of student loans–including the demographics of borrowers–on a quarterly basis. As of the third quarter of 2011, the outstanding balance on student loans ($870 billion) exceeded the outstanding balance on credit cards ($693 billion) and auto loans ($730 billion). That’s big.
Many businesses are discovering, to their horror, that student debt has killed the goose that should have been laying the golden eggs. Debt, coupled with double-digit unemployment, has hobbled millions of young adults who would have bought homes, married, had children, and feathered their nests with all the middle class goodies that keep our economy humming.
In their study of student debt, the Fed researchers used Equifax data to examine the demographics of those with student loans. Among the 241 million Americans of all ages with an Equifax credit report, 15 percent have outstanding student loan debt. It gets worse: Among people under age 30, fully 40 percent have outstanding student loans. Those loans don’t disappear as people age into their thirties. Among 30-to-39-year-olds, one in four still has student debt. The average outstanding student loan balance per borrower is $23,300, and the median balance is $12,800. People in their thirties owe the most (an average of $28,500), followed by those in their forties ($26,000). The Fed analysts calculate that 27 percent of student loan borrowers have past due balances.
Student debt has created a generation of indentured servants, and indentured servants don’t have the cash or credit to buy into the American Dream. That’s why we see…
- Less home buying. The homeownership rate of young adults is plummeting. In the 30-to-34 age group, the annual homeownership rate has fallen below 50 percent for the first time in the data series.
- Less mobility. Young adults aren’t moving as much because many live with parents who are helping them pay their bills.
- Fewer marriages. Who wants to marry an indentured servant? Among 25-to-29-year-olds, the percentage of men who have never married climbed from 52 to 64 percent between 2000 and 2011. Among women in the age group, 50 percent have never married, up from 39 percent in 2000.
- Fewer children. The annual number of births has fallen below 4 million, and the birth rate among women aged 20 to 24 is at a record low.
- Less spending. Spending by householders under age 35 has fallen sharply, especially on discretionary items such as restaurant meals, alcoholic beverages, and entertainment.
Student debt is a problem not just for young adults, but for older generations too and for every business that awaits the economic recovery.
By Cheryl Russell, editorial director, New Strategist Publications. Questions or comments, please contact
3. Cool Research Links
To keep up-to-date on ever-changing demographics and lifestyles, check out these useful links.
Every year for 22 years the Employee Benefit Research Institute has been surveying workers and retirees about their retirement plans. The 2012 survey finds a substantial 23 percent of workers feeling “not at all” confident in having enough money to live comfortably in retirement. This figure is down from the all-time high of 27 percent in 2011, but far greater than the 14 percent who say they are very confident.
The Social Security Administration publishes an annual overview of the economic status of older Americans. The overview includes tables that break down the percentage of the income of people aged 55 or older that comes from a variety of sources including earnings, Social Security, pensions, and interest. Here is the 2010 earnings share of the income of older Americans by age…
55 to 61: 72.3%
62 to 64: 52.0%
65 to 69: 31.4%
70 to 74: 15.5%
75 to 79: 8.5%
The 2011 annual homeownership rates from the Census Bureau’s Housing Vacancy Survey are available at this link. Since 2004 (the year the overall homeownership rate peaked), the homeownership rate has fallen in every age group. The biggest decline has been among householders aged 30 to 34 (down 7.6 percentage points to 49.8 percent). This is the first time the annual homeownership rate of householders aged 30 to 34 has been below 50 percent in the history of the data series, which extends back to 1982.
BET YOU DIDN’T KNOW
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.