I’ve blogged before about how the Great Recession and resulting high unemployment rates drove a significant number of young adults back into their childhood homes — or relying on Mom and Dad for financial support at least. It affected millions of young adults.
The economy and job prospects have been steadily improving since those dark days – even if the improvement hasn’t been as rapid as people would like to see …
But here’s an interesting finding: Those new jobs and the improving economy haven’t resulted in the kids moving back out of the house.
In fact, two studies conducted by the Pew Research Center in 2016 have determined that “living with parents” is now the single most common living arrangement for America’s 18-34 year olds.
That is correct: Instead of living with a spouse, a partner, a roommate or on his or her own, the largest single segment of millennials lives full-time with parents. The phenomenon is most prevalent in Connecticut, New Jersey and New York, where it’s no coincidence that the cost of living is much higher than the national average.
For marketers, this means that the once-coveted 18-34 year-old cohort is today made up of many people who are consuming other people’s resources (e.g., the resources of their parents) rather than making all of their own purchase decisions and spending their own money.
Furthermore, Pew Research has determined that living with parents isn’t merely about employment (or the lack thereof). Over the past eight years, adults age 18-34 have continued to move back home in greater numbers — even as more of them have been able to find jobs.
The Pew findings suggest yet another surprising trend that appears to be in the making – that this is the first American generation where a large portion of the people won’t ever purchase a home.
It’s easy to figure that trends of this kind are transitory. But Pew cautions that the trends may well be more fundamental than the implications of an economic recession. Instead, there are broader cultural dynamics at play – as well as the long-term challenges of economic independence for this generation of people.
The implications for marketers are intriguing, too. For some, it will mean placing more emphasis on marketing initiatives aimed at parents, who are the now ones making purchase decisions within a larger multi-generational household — often one that stretches over three generations rather than just two.
And consider these dynamics as well: How do young adults and their parents work through multi-generational purchase decisions? What are the most effective ways to target and reach multiple generations living under one roof who are making coordinated purchase decisions? Maybe the old ideas of targeting each audience separately no longer make as much sense as before.
One thing’s for sure – it’s risky for marketers to wait for a return to normal … because that “normal” likely isn’t coming back. Better to come up with new tactics and new messaging to reach and influence buyers in the new multi-generational environment.
In 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%
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.
One 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).
During the “great recession” that began in 2008, the United States saw an interruption in a decades-long pattern of more Americans moving away from states in the Midwest and Northeast than moving in, while more moved to states in the South and West.
The break in this pattern was good news for those who had bemoaned the loss of political clout based on the relative changes in state population.
To wit: In the four census periods between the 1960s and the 2000s, the 11 Northeast states plus DC saw their Electoral College percentage plummet by 15 percentage points, so that today they represent barely 20% of the electoral votes required to elect the U.S. president, with s similar lack of clout in the House of Representatives.
For the 12 Midwestern states, the trends haven’t been much better.
But for a few years at least, states in the Midwest and Northeast stopped shedding quite so many of their residents to the Southern and Western regions of the country.
The question was, would it last? Now we know the answer: Nope.
Instead, new census data is showing a return to familiar patterns. In the past few years, the states with the largest net in-migration of people are these predictable ones in the Sunbelt region:
Florida: +200,000 net new migrants
South Carolina: +46,000
By comparison, woebegone Illinois, beset by state fiscal crises, a mountain of over-bloated state pension obligations and a crumbling infrastructure that causes some people major-league heartburn on a daily basis, experienced a net loss of more than 100,000 people.
New York, Pennsylvania, Michigan, New Jersey and other “rust belt” states aren’t far behind.
This map, courtesy of The Washington Post, pretty much says it all:
There is one glaring difference today compared to previous decades. Back then, California was always at or near the top in terms of positive net in-migration from other states. That’s all different now – as California is a state with one of the largest net losses.
What’s particularly telling is that California, which used to share many of the characteristics of other Sunbelt and Western states, now seems much more in line with the Northeast and Industrial Midwest when it comes to fundamental factors like state personal and corporate tax rates, real estate prices, environmental regulations, employment dynamics, unionization rates, and the size of public payrolls as a share of the total labor force.
Based on the entrenched and intractable socio-political dynamics at work, don’t look for the migration patterns to change anytime soon.
What are your own personal perspectives, based on where you live?
In any presidential political season, there’s always plenty of rhetoric about the American economy, how well it’s performing for the average voter, and people’s perceptions of how they’re doing socioeconomically.
As it turns out, the Gallup Survey has been testing this issue annually for years now — going all the way back to 1988.
The question posed to Americans in Gallup’s surveys is a simple one: Do you consider yourself personally to be part of the “haves” or “have-nots” in America?
Gallup’s latest survey was fielded in July 2015. Nearly 2,300 U.S. adults aged 18 and older were part of the research.
In response to the “haves vs. have-nots” question, ~58% of respondents considered themselves to be “haves” in U.S. society, while ~38% placed themselves in the “have-nots” segment. (The remaining ~14% see themselves borderline between the two, or they don’t have an opinion.)
Over time, Gallup has found that the percentage of Americans who perceive themselves to be part of the “have-nots” in society rose pretty steadily from 1988 to 1998, but since that time the percentages have leveled off — even during the worst years of the Great Recession from 2009-2011.
And so, the “haves” percentage has fluctuated in a tight band between 57% and 60% in each year since the late 1990s.
It seems that heightened discussions about social inequality in America haven’t resulted in a higher percentage of people thinking that they are on the less fortunate side of the country’s socioeconomic divide.
However, considering that the latest Gallup survey was conducted in July 2015 — and that since that time there have been more news events drawing attention to the issues of social justice — one wonders if we may be on the cusp of some changing thinking on the subject.
Another persistent finding in Gallup’s surveys is this: Even among families of quite modest means (annual household incomes of $35,000 or lower), only a little more than half in that segment consider themselves to be part of the “have-nots” group.
Education-wise, the survey findings are similar, with fewer than half of the respondents who don’t possess college degrees considering themselves part of the “have-nots” segment.
“The stratification of U.S. society into unequal socioeconomic groups has long been a fixture of philosophic, political and cultural debate. It appears to have remained or even expanded as a fairly dominant leitmotif in the ongoing 2016 election, particularly among the Democratic presidential candidates.
[Nevertheless,] the results … in this analysis show that a majority of U.S. adults do not think of American society as being divided along economic lines, and a slightly higher percentage say that if society is divided, they personally are on the ‘haves’ side of the equation rather than the ‘have-nots.'”
More information about the Gallup survey results can be viewed here.
What are your thoughts? Do the perceptions Americans have of socioeconomic inequality — or the lack of it — match the reality? Or are we poised to see some new significant shifts in the way Americans view socioeconomic divisions in this country?
Two reports from advertising research sources released in the past month reveal that the advertising field doesn’t appear to be rebounding in strongly – at least not to same degree as the economy as a whole.
One report, from U.S. Ad Market Tracker, is an index that pools electronic media buys processed by major agency holding companies and their brand marketers.
It’s true that this report shows an increase in the overall ad activity index year-over-year of about 18 points (it’s 184 today … 166 a year ago … and 100 back in the recession year of 2009).
But when we look at the breakdown where most of the advertising growth is coming from, it’s nearly all from a handful of categories: social media advertising, advertising on video, Internet radio, plus ad network marketplaces.
By contrast, search advertising is growing at a much slower rate, and the most “commoditized” segments – particularly online display advertising – are doing little better than treading water.
This isn’t the robust rebound that many business and ad industry observers were expecting to see by 2015.
Over at Kantar Media, the statistics are even less encouraging.
Considering how lethargic in general the U.S. economy has been over that period, to be growing at less than the average is almost an indictment of the industry.
That’s what Kantar Media Chief Research Officer Jon Swallen suggests: a “streak that might have once seemed unimaginable, but now would seem par for the course.”
Second-quarter 2015 data released by Kantar estimates annualized measured media ad spending declines in the neighborhood of 4%.
More to the point, Kantar is seeing increases in just 7 of the 22 individual ad media categories it tracks, led by the same categories U.S. Ad Market Tracker identifies as the most healthy ones.
Perhaps a surprise — considering the overall disappointing numbers — is that Kantar has tracked two analogue categories as experiencing growth: radio and out-of-home advertising.
But print continues to decline at pronounced rates, and Internet display advertising has also officially joined the ranks of media segments that are contracting.
Is the disappointing performance of advertising a function of a weak market overall? Or is it the result of structural changes and the reallocation of promo dollars into different, in some cases non-advertising MarComm vehicles?
I’m not completely sure. It’s true that certain advertising categories that are “newer” ones are attracting more attention (and more dollars). But Kantar’s 2nd Quarter reporting of advertising expenditures by major industry category finds just one – one – segment that has experienced an overall increase year-over-year — pharmaceuticals:
When just one industry segment out of ten is showing an increase, it suggests more than just some restructuring or re-jiggering is going on. Instead, it’s just as likely that the U.S. advertising economy remains stuck in a recession, even if the overall economy has finally emerged from it.
What are your thoughts on the tepid advertising results? Please share your views with other readers.
It’s only natural for Americans to be somewhat spooked about what’s happening in the financial markets, what with thousand-point drops on the stock exchanges and all.
It’s even more disconcerting to realize that the forces in play are ones that have little to do with the American economy and a lot more to do with Europe and China. (China in particular, where bubbles seem to be bursting all over the place with the fallout being felt everywhere else.)
In times like this, I seek out the thoughts and perspectives of my brother, Nelson Nones, an IT specialist and business owner who has lived and worked outside the United States for nearly 20 years — much of that time spend in the Far East.
To me, Nelson’s thoughts on world economic matters are always worth hearing because he has the benefit of weighing issues from a global perspective instead of simply a more parochial one (like mine).
Yesterday, I had the opportunity to ask Nelson a few questions about what’s happening in the Chinese economy, how it is affecting the U.S. economy, and what he sees coming down the road. Here are his perspectives:
PLN: What is your view of the Chinese economy — and what does the future portend?
NMN: I’m a real pessimist when it comes to the current state of the Chinese economy. I also think the Chinese will turn on themselves politically as their economic house of cards is collapsing — so look for a sharp upturn in political and social turmoil as well.
Just as the bubble burst in the U.S. and Europe in 2007-08, it’s bursting now in China — and the rest of East Asia (South Korea, Japan, Thailand and Singapore) are going to get caught in the fallout because of the extent to which their economies are reliant on trade with China.
PLN: What do you look at, specifically, for clues as to future economic movements?
NMN: The barometer to watch is the price of oil. It plummeted in 2007, presaging the “great recession” in the West.
Oil prices began to drop again in 2014. The U.S. oil benchmark fell below $40 per barrel on August 24, 2015, a level not seen since 2009. I believe the underlying root cause is a sharp contraction of East Asian demand due to the economic bubbles bursting over here, coupled with persistently high supply as Middle Eastern oil exporters compete against American producers to protect market share.
PLN: How will these developments affect the U.S. economy?
NMN: The oil bust will continue in the U.S., dragging the economy down. But energy prices will be lower, buoying other parts of the American economy. For instance, the domestic airline sector will benefit and consequential demand for Boeing jets will grow.
U.S. imports — specifically, imports from China and the rest of East Asia — will become cheaper as China and other countries allow their currencies to fall in order to protect their exports.
This is probably a “net-neutral” for the US economy in that American exports will be hurt due to the relatively stronger U.S. Dollar, but American consumers will benefit from lower prices. So, the direct economic impact is likely to be mixed.
PLN: So, why worry?
NMN: The real risk, in my opinion, is a global liquidity crisis. Over the past quarter-century, China and other East Asian countries have accrued enormous wealth. But they didn’t hoard their newfound wealth; they invested it both domestically and overseas.
China has invested ginormous amounts of cash in domestic infrastructure and housing. That money is already spent, and a sizeable part of the investment has already gone to waste in the form of corruption, new housing that nobody wants, underutilized transport infrastructure and non-performing loans made to inefficient state-owned enterprises.
All of this will eventually need to be written off (that’s why their bubble is bursting).
But China has also invested lots of money in overseas financial instruments. Think of the Chinese as the folks who financed the Federal Reserve’s Quantitative Easing program as well as Federal debt in the U.S. But as the Chinese run out of cash at home, they will increasingly need to liquidate their overseas investments just to pay their bills.
This poses a very real threat to the fiscal stability of U.S. and European governments, and to the supply of capital in U.S. and European financial markets.
The Federal Reserve is likely to be caught in a double-bind. On the one hand, if the Fed raises interest rates in response to the reduced supply of capital (as it is widely assumed they will, later this year), they risk choking off the tepid U.S. recovery currently underway.
This would also cause the U.S. Dollar to strengthen further, thereby exacerbating the negative impact of the Chinese bust by making U.S. exports less competitive in global markets.
On the other hand, if the Fed leaves interest rates where they are (basically zero), then they won’t be able to attract enough capital to roll over the public debt that the Chinese are trying to liquidate. In other words, the Fed risks a “run on the bank.”
The Fed can deal with this by printing more money (more or less what the Chinese did in 2007-8), but this would inevitably introduce inflationary pressures in the U.S. It would also lengthen the time it takes for the Chinese to right their ship, because it will put downward pressure on the U.S. Dollar, thereby constraining whatever the East Asians can do to boost exports.
My guess is that the Federal Reserve will “blink” and keep interest rates at zero (and also print more money to pay off the Chinese) in hopes that (somewhat) cheaper imports will offset (some of) the inflationary impact of printing more money.
This is equivalent to kicking the can down the road.
PLN: Do you see any impact on the 2016 Presidential race in the United States?
NMN: As a result of kicking the can down the road, I foresee little impact on the 2016 U.S. Presidential race — but watch out in 2020 when the hangover is well underway.
Alternatively if the Fed raises interest rates, I suspect the Democratic Party candidate will be more vulnerable because the short-term economic pain will be much higher in the U.S. The incumbent party will get most of the blame. Fair or not, that’s just the way bread-and-butter issues play out in American politics.
PLN: What about unrest in China — might that have political repercussions in America?
NMN: The way I see it, political or social turmoil in China will have zero impact on the U.S. Presidential race. Americans of nearly every political stripe or ideology dislike or distrust Chinese governance, yet unlike the “China lobby” of the Cold War era, they have no appetite to intervene in what they rightly perceive to be internal Chinese affairs.
Or they’re clueless about events in East Asia. Or they just don’t care.
So there you have it — a view from the Far East. If you have other perspectives, please share them with our readers here.
Update (8/28/15): A few days after this post was uploaded, I received this follow-up from Nelson:
Just as I had predicted, check out this link. Federal debt is getting more expensive to finance, because the drop in demand for U.S. Treasury bonds (caused by the Chinese liquidation apparently underway) is driving yields up. According to the article, “The liquidation of such a large position, if it continues, could wreak havoc on the Treasuries market.”
The Fed’s purchases of Treasuries and mortgage-backed securities now make up ~85% of the Fed’s assets. The Fed hasn’t indicated what it will do when these assets mature, but if it doesn’t roll over this debt (or a portion thereof) then we can expect Treasury yields to rise yet again. Even if the Fed decides to keep interest rates where they are, at near-zero, rising Treasury yields could bring on a liquidity crunch within the private sector as capital is increasingly drawn away from private investments (loans, corporate bonds and equities) to government-issued bonds paying higher yields with little risk.
Facing the Chinese liquidation, this is why I suspect the Fed will opt to roll over its holdings of Treasuries and mortgage-backed securities, and keep interest rates at near-zero, at least through the 2016 Presidential election cycle. The Bloomberg article cited above describes QE as an alternative to printing more money, but in the end it’s really the same thing.
Back in 2009, no industry in the United States took such reputation beating as the financial services segment. And to find out how much, we needn’t look any further than Harris survey research.
The Harris Poll Reputation Quotient study of American consumers is conducted annually. The most recent one, which was carried out during the 4th Quarter of 2014, encompassed more than 27,000 people who responded to online polling by Harris.
In the survey, companies are rated on their reputation across 20 different attributes that fall within the following six broad categories:
Products and services
Vision and leadership
Taken together, the ratings of each company result in calculating an overall reputation score, which the Harris researchers also aggregate to broader industry categories.
Most everyone will recall that in 2009, the U.S. was deep in a recession that had been brought about, at least in part, by problems in the real estate and financial services industry segments.
This was reflected in the sorry performance of financial services firms included in the Harris polling that year.
Back then, only 11% of the survey respondents felt that the financial services industry had a positive reputation.
So it’s safe to conclude that there was no place to go but “up” after that. And where are we now? The latest survey does show that the industry has rebounded.
In fact, now more than three times the percentage of people feel that the financial services industry has a positive reputation (35% today vs. 15% then).
But that’s still significantly below other industry segments in the Harris analysis, as we can see plainly here:
Technology: ~77% of respondents give positive reputation ratings
Consumer products: ~60% give positive reputation ratings
Financial services: ~35%
So … it continues to be a slow slog back to respectability for firms in the financial services field.
Incidentally, within the financial services category, insurance companies tend to score better than commercial banks and investment companies when comparing the results of individual companies in the field.
USAA, Progressive, State Farm and Allstate all score above 70%, whereas Wells Fargo, JP Morgan Chase, Citigroup, BofA and Goldman Sachs all score in the 60% percentile range or below.
Wendy Salomon, vice president of reputation management and public affairs for the Harris Poll, contends that financial services firms could be doing more to improve their reputations more quickly. Here’s what she’s noted:
“Most financial companies have done a dismal job in recent years of connecting with customers and with the general public on what matters to them. Yet there’s no reason Americans can’t feel as positively toward financial services firms as they do towards companies they hold in high esteem, such as Amazon or Samsung, which have excellent reputations because they consistently deliver what the general public cares about …
[Individual] financial firms have a clear choice now: Prioritize building their reputations and telling their stories, or let others continue to fill that void and remain lumped together with the rest of the industry.”
Here’s another bit of positive news for companies in the financial services field: They’re no longer stuck in the basement when it comes to reputation.
That honor now goes to two sectors that are Exhibits A and B in the “corporate rogues’ gallery”: tobacco companies and government.
Both of these choice sectors come in with positive reputation scores hovering around 10%.
I suspect that those two sectors are probably doomed to bounce along the bottom of the scale pretty much forever.
With tobacco, it’s because the product line is no noxious.
And with government? Well … with the bureaucratic dynamics (stasis?) involved, does anyone actually believe that government can ever instill confidence and faith on the part of consumers? Even governments’ own employees know better.