According to American Demographics Founder Peter Francese, Americans out pace the rest of the world, by far, in weekly spending on the consumption of goods. He says Americans, each week, spend more than the gross domestic product of Finland. Francese wonders just how necessary it is for many Americans to “need two homes, three vehicles and four TVs” but he’s not complaining acknowledging that world-beating consumption keeps the ad industry afloat. In fact, if consumer spending, over the past ten years, rose at a rate equal to the increase of households (14 percent) rather than 23 percent, people would have spent $640 billion less altering the current American economy orders of considerable magnitude.
Francese doubts this dramatic increase in spending can continue citing the rapid rise of young single mothers with incomes of less than $27,000, a 17 percent increase in poverty in the last five years and a shrinking middles class – the backbone of economic growth and a decline in men going to college aside an increase in female attendance – a good thing – that will result in more women working but at lower wages than men – a bad thing.
Francese does point to some positives as well. While fewer men are going to college, more women are which, in one scenario, can be a bad thing but in another – one that sees an increase in women taking full time work at twice the rate of men – can be a good thing along with the increase in the kinds of product purchases that full time work brings. Francese says he “mass affluent” class, defined as those with increasing home values and annual spends of $100,000 or more has increased seven percent compared to overall household growth of one percent over the past ten years. He says the rising swell of baby boomers with the unlikeliness to retire at 65, their later-born children requiring college tuition later in the lifecycle, their professional position in higher paying, white collar jobs will help boost consumer spending for many years to come.
After reviewing the bad and the good, Francese is still optimistic, writing, “it is my belief that increasingly wealthy and influential women combined with more affluent and aging baby boomers will look at the problems described above and craft solutions in new and creative ways. The reason for my optimism is our progressively more knowledge-based economy. It means that we can and will know more about our consumer economy’s strengths and weaknesses, and how to prevail over its weaknesses.”
