Affluent Market

Where the Millionaires Are

Phillip Nones Demographics, Economics, Employment, Social Commentary , , , , , , ,

Look to the states won by Hillary Clinton in the 2016 presidential election.

Proportion of “millionaire households” by state (darker shades equals higher proportion of millionaires).

Over the past few years, we’ve heard a good deal about income inequality in the United States. One persistent narrative is that the wealthiest and highest-income households continue to do well – and indeed are improving their relative standing – while many other families struggle financially.

The most recent statistical reporting seems to bears this out.

According to the annual Wealth & Affluent Monitor released by research and insights firm Phoenix Marketing International, the total tally of U.S. millionaire households is up more than 800,000 over the past years.

And if we go back to 2006, before the financial crisis and subsequent Great Recession, the number of millionaire households has increased by ~1.3 million since that time.

[For purposes of the Phoenix report, “millionaire households” are defined as those that have $1 million or more in investable assets. Collectively, these households possess approximately $20 billion in liquid wealth, which is nearly 60% of the entire liquid wealth in America.]

Even with a growing tally, so-called “millionaire households” still represent around 5% of all U.S. households, or approximately 6.8 million in total. That percentage is nearly flat (up only slightly to 5.1% from 4.8% in 2006).

Tellingly, there is a direct correlation between the states with the largest proportion of millionaire households and how those states voted in the most recent presidential election. Every one of the top millionaire states is located on the east or west coasts – and all but one of them was won by Hillary Clinton:

  • #1  Maryland
  • #2  Connecticut
  • #3  New Jersey
  • #4  Hawaii
  • #5  Alaska
  • #6  Massachusetts
  • #7  New Hampshire
  • #8  Virginia
  • #9  DC
  • #10  Delaware

Looking at the geographic makeup of the states with the highest share of millionaires helps explain how “elitist” political arguments had a degree resonance in the 2016 campaign that may have surprised some observers.

Nearly half of the jurisdictions Hillary Clinton won are part of the “Top 10” millionaire grouping, whereas just one of Donald Trump’s states can be found there.

But it’s when we look at the tiers below the “millionaire households” category that things come into even greater focus. The Phoenix report shows that “near-affluent” households in the United States – the approximately 14 million households having investable assets ranging from $100,000 to $250,000 – actually saw their total investable assets decline in the past year.

“Affluent” households, which occupy the space in between the “near-affluents” and the “millionaires,” have been essentially treading water. So it’s quite clear that things are not only stratified, but also aren’t improving, either.

The reality is that the concentration of wealth continues to deepen, as the Top 1% wealthiest U.S. households possess nearly one quarter of the total liquid wealth.

In stark contrast, the ~70% of non-affluent households own less than 10% of the country’s liquid wealth.

Simply put, the past decade hasn’t been kind to the majority of Americans’ family finances. In my view, that dynamic alone explains more of 2016’s political repercussions than any other single factor.  It’s hardly monolithic, but often “elitism” and “status quo” go hand-in-hand. In 2016 they were lashed together; one candidate was perceived as both “elitist” and “status quo,” and the result was almost preordained.

The most recent Wealth & Affluent Monitor from Phoenix Marketing International can be downloaded here.

The financial goals — and worries — of affluent consumers: It turns out they’re more similar than different from the broader population.

Phillip Nones Economics, Security, Social Commentary , , , , , , ,

But gender differences do exist …

acIn this year’s U.S. presidential election campaign, there’s been a good deal of attention paid to so-called “working class” voters. No doubt, this is a segment of the electorate that’s especially unhappy with the current state of affairs in the country.

But what about other population groups?

As it turns out, affluent Americans are worried about many of the same things as well. A recent survey of affluent Americans conducted by the Shullman Research firm reveals that their worries are fundamentally similar to other Americans.

Here’s what survey respondents revealed as their to worries:

  • Your own health: ~36% of respondents cited as a top worry
  • Your family’s health: ~31% cited
  • Having enough money saved to retire comfortably: ~30%
  • The economy going into recession: ~28%
  • Terrorism: ~27%
  • Inflation: ~23%
  • The price of gasoline: ~22%
  • Being out of work and finding a good job: ~20%
  • Political issues / warfare around the world: ~15%
  • Taking care of elderly parents: ~15%

[One mild surprise for me was seeing how many respondents cited “the price of gasoline” as a source of worry, considering not only the recent easing of those prices as well as the affluence level of the survey sample.]

Generally speaking, the research found few gender differences in these responses, but with a few exceptions.

Men were more likely to cite “inflation” as a concern (28% for men vs. 18% for women), whereas women were more likely to consider “the economy going into recession” as a concern (30% for women vs. 26% for men).

Where there’s more divergence between genders is in how people’s identify their top financial goals. Here’s how the various goals tested by the Shullman research ranked overall:

  • Having enough money for daily living expenses: ~57% citied as a top financial goal
  • Having enough money for unexpected emergency expenses: ~56%
  • Having enough income for retirement: ~46%
  • Reducing my debt: ~41%
  • Improving my standard of living: ~40%
  • Remaining financially independent: ~39%
  • Becoming financially independent: ~33%
  • Keeping up with inflation: ~30%
  • Providing protection for family members if I die: ~29%
  • Purchasing a home: ~19%
  • Providing for my children’s college expenses: ~19%
  • Providing an estate for my spouse and/or children: ~16%

Obviously, some of the goals that rank further down the list are more applicable to certain people at certain stages in their lives — whether they’re just getting started in their career, raising young children and so forth.

But I was struck at how many of these supposed “affluent” respondents cited “having enough money for daily living expenses” as a top financial goal. Wouldn’t more people have already achieved that milestone?

Another interesting finding: With many of the goals, women place more importance on them than do men:

  • 63% of women versus just 50% of men consider “having enough money for daily living expenses” to be a top financial goal.
  • 63% of women versus just 47% of men consider “having enough money for unexpected emergency expenses” a top financial goal.
  • 48% of women versus just 33% of men consider “reducing debt” a top financial goal.
  • 45% of women versus just 34% of men consider “improving their standard of living” a top financial goal.
  • 36% of women versus 30% of men consider “becoming financially independent” a top financial goal.

caOne explanation for the differences observed between men and women may be the “baseline” from which each group is weighing their financial goals. But since the survey was limited to affluent consumers, one might have expected that the usual demographic characteristics wouldn’t apply.  Perhaps the differences are rooted in other, more fundamental characteristics.

What are your thoughts? Please share them with other readers.

More information and insights from this study can be accessed here (fee-based).

America’s “Summer of Funk”

Phillip Nones Uncategorized , , , , , , , , , ,
Consumers are in a funk in the Summer of 2012.

How much do American consumers spend in an average day? According to a July 2012 Gallup Poll, they spend about $70 per day in stores, gas stations, restaurants and online. (Housing, utility costs and vehicle purchases are extra.)

It turns out that this figure is a pretty big drop from the average daily spend of $104 Gallup found in 2008.

That meme we’re hearing on the campaign trail about people’s livelihoods having shrunk over the past three or four years? Evidently, it’s a fact.

And Gallup is also finding that upper-income Americans have undergone the same degree of spending reduction as everyone else. Their spending is now down to about $116 per day.

Evidently, confidence in the U.S. economy and the stock market’s uneven performance have taken their toll on the psyche of even the affluent classes in America. And Gallup isn’t the only organization charting this. Ipsos MediaCT is finding a similar story in its surveys.

Last week, Stephen Kraus, an Ipsos senior vice president and author of several books on the upper-income sector of society, wrote: “Widespread uncertainty plays a role in a fundamental fact of today’s “affluent” marketplace. For the most part, affluents today simply don’t feel affluent.”

Krauss continues, “This feeling isn’t new; for most, it is part of the lingering hangover of The Great Recession. But it is particularly pronounced in the summer of uncertainty.

Krauss concludes his remarks with this rather gloomy observation: “It’s a summer of uncertainty indeed – about the economy, about the future, and even about one’s own standing in today’s financial hierarchy.”

Reading these very latest reports on the level of uncertainty – even resignation – that people have about the economy, it underscores the collective funk the American people seem to be in as the 2012 presidential campaign grinds on inexorably to its conclusion.

Perhaps once Election Day has come and gone, Americans will “snap out of it” and begin to feel brighter about the future.

Perhaps. But don’t hold your breath.