Superficial Analysis of Affluence

No, this isn’t a blog about the current primary elections, the sound bytes used by candidates or the less-than-brilliant reporting by the media.  That’s to obvious and there’s nothing much to learn from that disappointing experience.

No, my focus is on the business press, and why we can get wild divergences from one day to the next.  On Tuesday, the sky is falling.  On Wednesday, the markets are posed for a surge based on (possibly false) economic reports from country X.  I haven’t heard about a reader charging the financial press with a whiplash injury, but in our litigious society, I’m sure its only a matter of time.

One recent example concerns the health of the US consumer.  Who controls the wealth?  One source, Yahoo, talks about Millenials controlling over one-third of income.  Another, Pew, talks about Boomers controlling 70% of disposable income.  Both statements contain some truth, but nether is solid foundation for a business plan.

Why is that?  Simply, a dollar to a Millenial isn’t the same thing as a dollar to a Boomer.

(1) Millennials are mired in the gig economy.  Short term jobs provide  some sense of “freedom,” but also provide no benefits.  There’s no paid vacation and no healthcare.  Millennials also have student loans.  So members of the 20-30 age group face much higher expenses than their predecessors.  Their incomes haven’t grown enough to cover these additional costs.  Money available for discretionary spending is almost non-existent.  Stores focusing on sales to this group have a problem.

(2) 60 year olds have home equity,some money in the make, Social Security and Medicare.  They may not have enough for the length of time they will live, but if not, most don’t know that yet.    Those that can afford to do so are invested in annuity products that guarantee income through their lifetime.

As the tag line used by one invest2ment company in NYC years ago went, wealth is not about how much you earn, its about how much you keep.  Boomers may have lower earned incomes than Millennials, but they may have more money available to spend on what they want.  Recent reductions in inheritance taxes further distort the relationship between earned income and wealth.

Most of the evidence seems to support a focus on older consumers.  Some consumer brands are starting to notice, for example, with the introduction of hair care products for senior women.







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