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Press Room
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The Changing Face of the U.S. Consumer
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July 22, 2008
A big share of future spending growth may come from the 26 million households headed by people under 35. A majority of these young households spend well in excess of their relatively meager incomes on a wide array of consumer goods, according to Bureau of Labor Statistics surveys.
Households headed by people under 35 account for only a little more than a fifth of consumer spending by themselves, but they cause vast spending by others on their weddings and babies. There really should be a separate category in the national GDP figures for competitive grandparenting by baby boomers. They can be seen in any Hanna Andersson outlet buying armloads of pricey kids' clothes.
Young singles and young families with children are more diverse, better educated, more environmentally aware, deeper in debt and more globally connected via new media than any previous generation.
Not too surprisingly, they are more open to new ideas, more tolerant than their predecessors, and more aware that they live and compete for jobs in a global economy.
These young adults are also the first ones many boomers and older people have predicted will not live as well as previous generations. Millions of young consumers have responded to that with a dismissive shrug. Perhaps it's hard for them to take seriously predictions about themselves by a technically challenged crowd that doesn't even send text messages.
But there is more that separates these young-adult consumers from their parents' and grandparents' generations than texting competence. One defining difference can be seen in the the chart to the left: Only one in five consumers over 65 is Hispanic, Black or Asian, compared with two in five consumers under 45.
Mobile teens
Hispanic women, in fact, have a median age 14 years younger than the white, non-Hispanic population.
There are about 25 million U.S. teenagers 12 to 17, and any casual observer would guess that 24.99 million of them have cellphones. These teens and their parents are among the most diverse consumer segments in the nation, depending on where they live. Three-fifths of families with teens live in the South (36%) or West (24%) while only 18% live in the Northeast and 22% in the Midwest.
The chart on the right illustrates the great variation in diversity by region. More than three-quarters of teens in the Midwest are non-Hispanic whites, compared with only about half in the West and South. Variations are even greater from state to state. In California and Texas, two of the largest states, more than half of household heads are Hispanic, Black, Asian or multiracial.
Locating teenagers and young adults is, of course, not enough. Speaking to them with words and images they can relate to is a major challenge for senior -- and I mean senior -- marketing executives. Young consumers can sniff out condescending pander from boomers like new moms detecting a dirty diaper two rooms away.
Speaking of new moms, their educational attainment is at a record high. Nearly half (45%) of women 25 to 39 have a college degree, compared with just one-third of women 30 years older (55 to 69). More education means more-independent, savvier consumers with greater ability to evaluate product or service claims and decide for themselves which represent the best value for them or their children.
Claritas/Nielsen projections of households headed by people under 35 suggest that growth in the next five years will be pretty minimal. Their income may increase, but their relatively small numbers suggest they are not going to replace baby-boomer household spending anytime soon.
The immigration imperative
For the past seven years, 40% of U.S. population growth has come from immigration. Five large states (New York, New Jersey, Michigan, Connecticut and Illinois) would have seen dramatically shrinking work forces and total population declines were it not for the millions of immigrants who moved to those states.
Yet anti-immigrant rhetoric on talk radio and factory roundups by Immigration and Customs Enforcement have created the impression that immigrants are a scourge on our nation.
According to the Pew Research Center, 42% of Americans think immigration is a "big problem." A not-too-well-informed woman on a TV talk show with me said flatly: "They're drinking all our water."
In her book "Bet You Didn't Know" (Prometheus Books, August 2008), Cheryl Russell writes that Americans have become increasingly agitated about immigrants. Most upset, it seems, are people who live where there are the fewest immigrants.
"People most affected by immigration are least concerned about it, evidence that fantasy -- not reality -- is driving the narrative and stoking the immigration debate," Ms. Russell reports.
Fortunately, cooler and much-better-informed heads are analyzing the situation and coming to sensible conclusions. Dowell Myers, writing in Communities & Banking (a quarterly publication of the Federal Reserve Bank of Boston), concludes his article "Immigrants' Contributions in an Aging America" with this paragraph:
Immigration opportunities
"The future of America will be formed at the intersection of two great demographic forces. With the inexorable aging into senior status of the giant baby-boom generation, immigration may be the best way to get needed workers, taxpayers and home buyers. ... The best thing to be done for America's future is to think ahead and optimize the intersection between aging America and immigration."
He might have added shoppers to the list of things we need as boomers move out of their prime spending years, 35 to 54. We could certainly use more immigrant families to bulk up the smaller Generation X and repopulate our base of consumers.
The rapidly aging Northeast region could certainly use more immigrants as well to care for its large and growing multitude of retirees.
Perhaps the best thing forward-looking marketing folks can do is to become more fully engaged in the national debate about immigration. It's bizarre that we permit and encourage global movement of consumer goods, services and money, but not workers. Given our aging population, we clearly need to permit higher levels of immigration to feed our future labor-market needs.
At the very minimum, we should stop treating immigrants so shabbily. After all, they are the only ones likely to bail us out of our heavily mortgaged future.
Change agent
What Peter Francese says you need to know -- and do -- to reach the changing consumer
NEW FACES
THE TREND: The median age of U.S. Hispanic women is about 28—14 years younger than the median age for white, non-Hispanic women. Two in five consumers under 45 are Hispanic, Black or Asian (vs. one in five for 65- plus). More than half of household heads in California and Texas are Hispanic, Black, Asian or multiracial.
WHAT TO DO: If you want to be the choice of a new generation, embrace the cultures and voices of that generation.
IMMIGRATION IMPERATIVE
THE TREND: In the past seven years, 40% of U.S. population growth has come from immigration. Five big states (New York, New Jersey, Michigan, Illinois and Connecticut) would have seen their work forces and populations shrink were it not for new immigrants.
WHAT TO DO: Marketers need to engage in the national debate about immigration. Immigrants, after all, are a source of labor—and a prime source of new consumers.
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