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Consumers and The Economic Outlook - US - February 2013

“Mintel’s data show that consumers are aware that they do not have nearly enough saved for either short-term concerns or for long-term goals such as retirement. In addition, they are not overly optimistic about the housing market, and are not relying on their homes to appreciate in value. What this means is that the household deleveraging process of the last few years is only the beginning. Consumers are now focusing on building financial security in different ways than those they have traditionally relied on.”

– Susan Menke, Senior Financial Services Industry Analyst

Some questions answered in this report include:

  • Are there indications that consumers will spend more in the future?
  • Which groups are struggling the most in the current economy?
  • How optimistic are homeowners about real estate prices?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Comperemedia
            • Abbreviations and terms
              • Abbreviations
                • Terms
                  • Companies mentioned in this report
                  • Executive Summary

                      • Consumer spending and GDP growth
                        • The importance of consumer spending
                          • Figure 1: Personal consumption expenditures, Jan. 1, 2000-Nov. 1, 2012
                          • Figure 2: Real PCE as a percentage of GDP, 1947-2012
                        • Household financial health and expectations
                          • High incomes don’t guarantee financial security
                            • Figure 3: Current economic situation of household, by household income, December 2012
                          • Younger Boomers are struggling the most
                            • Figure 4: Current economic situation of household, by age, December 2012
                          • Households are healthiest in the Northeast
                            • Figure 5: Current economic situation of household, by region, December 2012
                          • More than half expect their incomes to remain steady
                            • Figure 6: Expectations for household economic situation in next 12 months, December 2012
                          • Expectations for higher inflation and taxes
                            • Figure 7: Expectations for U.S. economic situation in next 12 months, December 2012
                          • Blacks are the most optimistic
                            • Inflationary expectations are high, particularly for older groups
                              • Half believe home prices will remain steady, a third expect increases
                                • Financial goals and spending plans
                                  • Consumers are still reluctant to spend
                                    • Figure 8: Intention to purchase a big-ticket item in next 30 days, 2007-12
                                  • People are prioritizing short-term savings
                                    • Figure 9: Importance of financial goals in next 12 months, very and somewhat important, December 2012
                                  • Even high-income households may lack an adequate financial cushion
                                    • Goals for homeowners
                                      • Figure 10: Goals for homeowners over next two years, overall, December 2012
                                    • Mass affluent somewhat more likely to spend on home improvements
                                      • Figure 11: Goals for homeowners over next two years, overall and mass affluent, December 2012
                                    • Attitudes toward economic success and the “American Dream”
                                      • Education and hard work are key to success, but so is good credit
                                        • Figure 12: Most important factors in achieving economic success, strongly and somewhat agree, December 2012
                                        • Figure 13: Attitudes about economic situation in the U.S, any agree, December 2012
                                      • Gender and the American Dream
                                        • Figure 14: Most important factors in achieving economic success, any agree by gender, December 2012
                                        • Figure 15: Attitudes about economic situation in the U.S, any agree by gender, December 2012
                                      • Democrats much more optimistic about the economy
                                        • Figure 16: Expectations for increases in economic variables in next 12 months, by political affiliation, December 2012
                                      • What we think
                                      • Issues in the Market

                                          • Are there indications that consumers will spend more in the future?
                                            • Which groups are struggling the most in the current economy?
                                              • How optimistic are homeowners about real estate prices?
                                              • Insights and Opportunities

                                                • Key points
                                                  • Mass affluents are focused on saving, not spending
                                                    • Women have different expectations than men
                                                      • Consumers see good credit as a major factor in economic success
                                                        • Blacks/African-Americans are extremely optimistic
                                                          • Lack of emergency savings conflicts with retirement savings goals
                                                            • Political affiliation is an important variable in consumer sentiment
                                                              • Americans could use a little faith in the economic future of their country
                                                                • Advertising is reflecting the new consumer mindset
                                                                • Trend Applications

                                                                    • Trend: Prepare for the Worst
                                                                      • Trend: Totophobia
                                                                        • Mintel Futures: Old Gold
                                                                        • Current Economic Environment

                                                                          • Key points
                                                                            • GDP above pre-recessionary levels
                                                                              • Figure 17: Real Gross Domestic Product, billions of chained 2005 dollars, Jan. 1, 1980-Oct. 1, 2012
                                                                            • Consumer spending and GDP growth
                                                                              • Figure 18: Personal consumption expenditures, Jan. 1, 2000-Dec. 1, 2012
                                                                              • Figure 19: Real PCE as a percentage of GDP, 1947-2012
                                                                              • Figure 20: PCE as a percentage of GDP in U.S. vs. Canada, 1961-2010
                                                                            • The U.S. consumer and the global economy
                                                                              • Figure 21: U.S. GDP as a percentage of World GDP/PPP, 2002-12
                                                                            • Other components of GDP
                                                                              • Figure 22: Real imports of goods and services, Jan. 1, 1980-Oct. 1, 2012
                                                                              • Figure 23: Real net exports of goods and services, Jan. 1, 1995-Oct. 1, 2012
                                                                            • Consumer spending may have crowded out investment
                                                                              • Figure 24: Real private non-residential fixed investment, billions of chained 2005 dollars, Jan. 1, 1995-Oct. 1, 2012
                                                                              • Figure 25: Real private residential fixed investment, billions of chained 2005 dollars, Jan. 1, 1995-Oct. 1, 2012
                                                                              • Figure 26: Real government expenditures, Jan. 1, 1995-Oct. 1, 2012
                                                                            • The impact of a slower rate of growth in consumption
                                                                              • Figure 27: Real retail and foodservice sales, Jan. 1, 1992-Dec. 1, 2012
                                                                          • Indications for Future Consumer Spending

                                                                            • Key points
                                                                              • Current trends
                                                                                • Impact of the “Great Recession” on household net worth
                                                                                  • Figure 28: Household net worth, 1980-Q3 2012
                                                                                  • Figure 29: Household net worth as a percentage of DPI, 1965-Q3 2012
                                                                                • Total real wages now at 2008 levels
                                                                                  • Figure 30: Real personal income, Jan. 1, 2000-Dec. 1, 2012
                                                                                  • Figure 31: Productivity per person, Jan. 1, 2000-Sept. 1, 2012
                                                                                • Low interest rates and the wealth effect
                                                                                  • Figure 32: 30-year fixed rate mortgage average, 1995-2013
                                                                                  • Figure 33: Consumer credit outstanding, total, revolving and non-revolving, 1995-2012
                                                                                • Household debt burden—positive indicators
                                                                                  • Disposable personal income has increased
                                                                                    • Figure 34: Disposable Personal Income, Jan. 1, 2000-Dec. 1, 2012
                                                                                  • Household debt service ratios have fallen
                                                                                    • Figure 35: U.S. debt service ratio, all households, Q1 1980-Q3 2012
                                                                                    • Figure 36: U.S. financial obligations ratio, all households, Q1 1980–Q3 2012
                                                                                    • Figure 37: U.S. financial obligations ratio, homeowners, Q11980-Q3 2012
                                                                                    • Figure 38: Components of FOR, homeowners, 1980-Q2 2012
                                                                                  • Other indicators—consumer sentiment
                                                                                    • Figure 39: University of Michigan Consumer Sentiment index, 1995-2012
                                                                                  • Savings rate reflects a focus on saving rather than spending
                                                                                    • Figure 40: Personal savings rate, Jan. 1, 2000-Dec. 1, 2012
                                                                                  • Stabilization in the housing market
                                                                                    • Figure 41: S&P Case Shiller 20-city home price index, Jan. 1, 2000-Nov. 1, 2012
                                                                                  • Inflation is steady
                                                                                    • Figure 42: Annual rate of inflation, CPI—Consumer price index, 1990-2012
                                                                                  • Gasoline prices may cause concern
                                                                                    • Figure 43: Average annual motor unleaded gasoline retail prices, U.S. city average, 1990-2012
                                                                                  • The supply side—credit availability
                                                                                    • Figure 44: Survey of bank lending officers—net percentage of respondents reporting increased willingness to make consumer instalment loans, 1990-2012
                                                                                • Innovations and Innovators

                                                                                  • Key points
                                                                                    • PFM tools give consumers a way to control spending/saving/debt
                                                                                      • Sites/apps that focus on building or monitoring credit
                                                                                        • Apps that “nudge” spending and saving behavior
                                                                                          • Prepaid cards as tools to manage spending
                                                                                            • Bank business model innovators
                                                                                              • Mobile banking innovators
                                                                                              • Marketing Strategies

                                                                                                • Key points
                                                                                                  • Marketing and the American Dream
                                                                                                    • Email advertisements
                                                                                                      • Figure 45: Regions Bank email ad, January 2013
                                                                                                      • Figure 46: PNC Bank Virtual Wallet email ad, January 2013
                                                                                                    • Online banner ads
                                                                                                      • Figure 47: American Express Bluebird prepaid card ad, December 2012
                                                                                                      • Figure 48: Visa prepaid card online banner ad, April 2012
                                                                                                    • Direct mail advertisements
                                                                                                      • Figure 49: Chase direct mail ad, November 2012
                                                                                                      • Figure 50: Bank of America direct mail ad, December 2012
                                                                                                      • Figure 51: Wells Fargo direct mail ad, December 2012
                                                                                                      • Figure 52: Discover direct mail ad, November 2012
                                                                                                      • Figure 53: Chase Freedom cash-back rewards print ad, May 2012
                                                                                                    • Television ads
                                                                                                      • Figure 54: Ameriprise Financial TV ad, January 2013
                                                                                                      • Figure 55: Ameriprise Financial TV ad version 2, January 2013
                                                                                                      • Figure 56: Bill My Parents Spend Smart card TV ad, August 2011
                                                                                                  • Consumer Sentiment and Macroeconomic Expectations

                                                                                                    • Key points
                                                                                                      • A third are struggling, a third are well off
                                                                                                        • Figure 57: Current economic situation of household, overall, December 2012
                                                                                                        • Figure 58: Current economic situation of household, by household income, December 2012
                                                                                                      • Household economic situation since the Great Recession
                                                                                                        • Figure 59: Attitudes about household financial situation, 2007-12
                                                                                                      • The economic recovery isn’t producing more optimism
                                                                                                        • Figure 60: Expectations about U.S. economic situation, 2007-12
                                                                                                      • Many are still wary of making big-ticket purchases
                                                                                                        • Figure 61: Intention to purchase a big-ticket item in next 30 days, 2007-12
                                                                                                        • Figure 62: Intention to purchase a medium-ticket item in next 30 days, 2007-12
                                                                                                        • Figure 63: Expectations for spending in next 30 days vs. last 30 days, 2007-12
                                                                                                      • Debt could be holding back consumer spending
                                                                                                          • Figure 64: Household debt situation, by household income, December 2012
                                                                                                        • Economic expectations for the next year
                                                                                                            • Figure 65: Expectations for household and U.S. economic situation in next 12 months, December 2012
                                                                                                            • Figure 66: Expectations for household situation in next 12 months, by household income, December 2012
                                                                                                          • Higher earners expecting an increase in taxes
                                                                                                            • Figure 67: Expectations for U.S. economic situation in next 12 months, by household income, December 2012
                                                                                                        • Financial Goals for Consumers

                                                                                                          • Key points
                                                                                                            • Good credit is a primary goal
                                                                                                                • Figure 68: Importance of financial goals in next 12 months, December 2012
                                                                                                              • Even higher earners want to increase their emergency savings
                                                                                                                  • Figure 69: Importance of financial goals in next 12 months, by household income, December 2012
                                                                                                              • The Economy and the “American Dream”

                                                                                                                • Key points
                                                                                                                  • What does the “American Dream” mean?
                                                                                                                    • Figure 70: What the American Dream means—percentage who say the following are components of the American Dream, 2008 and 2012
                                                                                                                  • Good credit just as important as education and hard work in achieving the American Dream
                                                                                                                    • Figure 71: Attitudes about the economy and the “American Dream,” December 2012
                                                                                                                    • Figure 72: Attitudes about the economy and the “American Dream,” December 2012, by household income, December 2012
                                                                                                                • Gender and the Economic Outlook

                                                                                                                  • Key points
                                                                                                                    • Men are more financially “healthy” than women
                                                                                                                      • Figure 73: Current economic situation of household, by gender, December 2012
                                                                                                                      • Figure 74: Current economic situation of household, by gender and age, December 2012
                                                                                                                      • Figure 75: Expectations for household economic situation in next 12 months, by gender and age, December 2012
                                                                                                                    • However, men are more pessimistic about economic growth
                                                                                                                      • Figure 76: Expectations for U.S. economic situation in next 12 months, by gender and age, December 2012
                                                                                                                    • Women are focused on maintaining good credit
                                                                                                                      • Figure 77: Importance of financial goals in next 12 months, by gender, December 2012
                                                                                                                      • Figure 78: Importance of financial goals in next 12 months, by gender and age, December 2012
                                                                                                                    • Men more likely to see the U.S. as a “land of opportunity”
                                                                                                                      • Figure 79: Attitudes about the economy and the “American Dream,” by gender, December 2012
                                                                                                                      • Figure 80: Attitudes about the economy and the “American Dream,” by gender and age, December 2012
                                                                                                                  • Age and the Economic Outlook

                                                                                                                    • Key points
                                                                                                                      • Older Gen X and Younger Boomers still struggling
                                                                                                                        • Figure 81: Current economic situation of household, by age, December 2012
                                                                                                                        • Figure 82: Current economic situation of household, by generation, December 2012
                                                                                                                      • Older Millennials look forward to the future
                                                                                                                        • Figure 83: Expectations for household economic situation in next 12 months, by age, December 2012
                                                                                                                      • Older respondents more likely to have inflationary expectations
                                                                                                                        • Figure 84: Expectations for U.S. economic situation in next 12 months, by age, December 2012
                                                                                                                      • Belief in education and hard work increases with age, young focus on entrepreneurship
                                                                                                                        • Figure 85: Attitudes about the economy and the “American Dream,” by age, December 2012
                                                                                                                      • Young homeowners planning to pay down mortgages
                                                                                                                        • Figure 86: Importance of financial goals in next 12 months, by age, December 2012
                                                                                                                        • Figure 87: Specific financial goals for next two or three years, by generation, October 2012
                                                                                                                        • Figure 88: Statements on household debt situation, by age, December 2012
                                                                                                                        • Figure 89: Statements on household debt situation, by gender and age, December 2012
                                                                                                                      • Age and household structure
                                                                                                                        • Figure 90: Current economic situation of household, by marital/relationship status, December 2012
                                                                                                                        • Figure 91: Statements on household debt situation, by marital/relationship status, December 2012
                                                                                                                    • Ethnicity and the Economic Outlook

                                                                                                                      • Key points
                                                                                                                        • Four in 10 Black and Hispanic households are struggling
                                                                                                                          • Figure 92: Current economic situation of household, by race/Hispanic origin, December 2012
                                                                                                                          • Figure 93: Expectations for household economic situation in next 12 months, by race/Hispanic origin, December 2012
                                                                                                                        • Blacks optimistic about the economy
                                                                                                                          • Figure 94: Expectations for U.S. economic situation in next 12 months, by race/Hispanic origin, December 2012
                                                                                                                        • Non-whites most focused on saving
                                                                                                                          • Figure 95: Importance of financial goals in next 12 months, by race/Hispanic origin, December 2012
                                                                                                                        • Whites, Hispanics most likely to be carrying a balance on credit cards
                                                                                                                          • Figure 96: Specifics about household financial situation, by race/Hispanic origin, December 2012
                                                                                                                        • Asians much more likely to see connections as important to economic success
                                                                                                                          • Figure 97: Attitudes about the economy and the “American Dream,” by race/Hispanic origin, December 2012
                                                                                                                      • Geographic Region and the Economic Outlook

                                                                                                                        • Key points
                                                                                                                          • Households are healthiest in the Northeast
                                                                                                                            • Figure 98: Current economic situation of household, by region, December 2012
                                                                                                                            • Figure 99: Expectations for household economic situation in next 12 months, by region, December 2012
                                                                                                                          • Western region most optimistic about real estate prices
                                                                                                                            • Figure 100: Expectations for U.S. economic situation in next 12 months, by region, December 2012
                                                                                                                          • Midwest region most leery about healthcare reforms
                                                                                                                            • Figure 101: Attitudes about the economy and the “American Dream,” by region, December 2012
                                                                                                                        • Homeowners and the Economic Outlook

                                                                                                                          • Key points
                                                                                                                            • The housing market
                                                                                                                              • Figure 102: New and existing home sales, 2007-Nov. 2012
                                                                                                                            • Homeowners most likely to view their financial situation as healthy
                                                                                                                              • Figure 103: Current economic situation of household, by homeownership status, December 2012
                                                                                                                              • Figure 104: Expectations for household and U.S. economic situation in next 12 months, by homeownership status, December 2012
                                                                                                                            • Half believe that home prices will remain at current levels
                                                                                                                              • Figure 105: Expectations for U.S. economic situation in next 12 months, by homeownership status, December 2012
                                                                                                                            • Two in 10 homeowners look to purchase a new home in next two years
                                                                                                                              • Figure 106: Goals for homeowners over next two years, overall, December 2012
                                                                                                                              • Figure 107: Goals for homeowners over next two years, by household income, December 2012
                                                                                                                            • Younger people hoping to upsize
                                                                                                                              • Figure 108: Goals for homeowners over next two years, by age, December 2012
                                                                                                                              • Figure 109: Goals for homeowners over next two years, by race/Hispanic origin, December 2012
                                                                                                                              • Figure 110: Goals for homeowners over next two years, by region, December 2012
                                                                                                                            • Mass affluents not more likely to move, pre-retirees twice as likely
                                                                                                                              • Figure 111: Goals for homeowners over next two years, pre-retirees and mass affluent, December 2012
                                                                                                                            • Homeowners similar to renters in perceptions of the “American Dream”
                                                                                                                              • Figure 112: Attitudes about the economy and the “American Dream,” by homeownership status, December 2012
                                                                                                                            • Homeowners less burdened with credit card debt
                                                                                                                              • Figure 113: Importance of financial goals in next 12 months, by homeownership status, December 2012
                                                                                                                            • More than a third of homeowners are mass affluent
                                                                                                                              • Figure 114: Statements household financial situation, by homeownership status, December 2012
                                                                                                                          • Mass Affluents and the Economic Outlook

                                                                                                                            • Key points
                                                                                                                              • Mass affluents have significantly healthier cash flow
                                                                                                                                • Figure 115: Current economic situation of household, mass affluent, December 2012
                                                                                                                              • Not more optimistic about salary increases
                                                                                                                                • Figure 116: Expectations for household economic situation in next 12 months, mass affluent, December 2012
                                                                                                                              • Some signs of concern over tax increases
                                                                                                                                • Figure 117: Expectations for U.S. economic situation in next 12 months, mass affluent, December 2012
                                                                                                                              • More focused on retirement savings
                                                                                                                                • Figure 118: Importance of financial goals in next 12 months, mass affluent, December 2012
                                                                                                                              • Mass affluents believe in American opportunities
                                                                                                                                • Figure 119: Attitudes about the economy and the “American Dream,” mass affluent, December 2012
                                                                                                                                • Figure 120: Statements on credit cards, household loans and retirement savings, mass affluent, December 2012
                                                                                                                            • Pre-retirees and the Economic Outlook

                                                                                                                              • Key points
                                                                                                                                • Only a third of pre-retirees expect their savings to increase this year
                                                                                                                                  • Figure 121: Current economic situation of household, pre-retirees, December 2012
                                                                                                                                  • Figure 122: Expectations for household economic situation in next 12 months, by retirement and savings, December 2012
                                                                                                                                • Focused on saving, but also on splurging
                                                                                                                                  • Figure 123: Importance of financial goals in next 12 months, by retirement and savings, December 2012
                                                                                                                                • Much more positive about the “American Dream”
                                                                                                                                  • Figure 124: Attitudes about the economy and the “American Dream,” pre-retirees, December 2012
                                                                                                                              • Political Affiliation and the Economic Outlook

                                                                                                                                • Key points
                                                                                                                                  • Republican households somewhat better off
                                                                                                                                    • Figure 125: Current economic situation of household, by political affiliation, December 2012
                                                                                                                                    • Figure 126: Expectations for household economic situation in next 12 months, by political affiliation, December 2012
                                                                                                                                  • Democrats much more optimistic about the economy
                                                                                                                                    • Figure 127: Expectations for U.S. economic situation in next 12 months, by political affiliation, December 2012
                                                                                                                                  • Democrats more focused on credit card debt
                                                                                                                                    • Figure 128: Importance of financial goals in next 12 months, by political affiliation, December 2012
                                                                                                                                  • Republicans value hard work and business ownership, Democrats value education
                                                                                                                                    • Figure 129: Attitudes about the economy and the “American Dream,” by political affiliation, December 2012
                                                                                                                                    • Figure 130: Political affiliation, mass affluent, December 2012
                                                                                                                                    • Figure 131: Political affiliation, by homeownership status, December 2012
                                                                                                                                • Cluster Analysis

                                                                                                                                    • Cluster 1: Status Quo Spenders
                                                                                                                                      • Demographics
                                                                                                                                        • Characteristics of this cluster
                                                                                                                                          • Cluster 2: Older Affluents
                                                                                                                                            • Demographics
                                                                                                                                              • Characteristics
                                                                                                                                                • Opportunity
                                                                                                                                                  • Cluster 3: Diverse Dems
                                                                                                                                                    • Demographics
                                                                                                                                                      • Characteristics
                                                                                                                                                        • Opportunity
                                                                                                                                                          • Cluster characteristic tables
                                                                                                                                                            • Figure 132: Target clusters, December 2012
                                                                                                                                                            • Figure 133: Goals for homeowners over next two years, by target clusters, December 2012
                                                                                                                                                            • Figure 134: Current economic situation of household, by target clusters, December 2012
                                                                                                                                                            • Figure 135: Importance of financial goals in next 12 months, by target clusters, December 2012
                                                                                                                                                            • Figure 136: Expectations for household economic situation in next 12 months, by target clusters, December 2012
                                                                                                                                                            • Figure 137: Expectations for U.S. economic situation in next 12 months, by target clusters, December 2012
                                                                                                                                                            • Figure 138: Attitudes about the economy and the “American Dream,” by target clusters, December 2012
                                                                                                                                                            • Figure 139: Loan delinquency and educational loan payments, by target clusters, December 2012
                                                                                                                                                            • Figure 140: Credit card ownership and payment behavior, by target cluster, December 2012
                                                                                                                                                            • Figure 141: Pre-retirees and mass affluent, by target cluster, December 2012
                                                                                                                                                            • Figure 142: Political affiliation, by target clusters, December 2012
                                                                                                                                                          • Cluster demographic tables
                                                                                                                                                            • Figure 143: Target clusters, by demographics, December 2012
                                                                                                                                                          • Cluster methodology

                                                                                                                                                          Companies Covered

                                                                                                                                                          • American Express Company (The)
                                                                                                                                                          • Ameriprise Financial Inc.
                                                                                                                                                          • Bank of America Corporation
                                                                                                                                                          • Chase Home Finance
                                                                                                                                                          • Discover Financial Services Inc.
                                                                                                                                                          • JWT Specialized Communications Inc.
                                                                                                                                                          • MasterCard Incorporated
                                                                                                                                                          • Regions Financial Corporation
                                                                                                                                                          • The PNC Financial Services Group
                                                                                                                                                          • Visa U.S.A. Inc.
                                                                                                                                                          • Wells Fargo & Company
                                                                                                                                                          • YouTube, Inc.

                                                                                                                                                          Consumers and The Economic Outlook - US - February 2013

                                                                                                                                                          £3,199.84 (Excl.Tax)