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Consumers and the Economic Outlook - US - February 2014

“Consumers are a little more optimistic than they were last year but still wary. Many (but not all) are aware that they are not saving enough, both for the short term as well as for retirement. This presents a wonderful opportunity for financial services firms to take a holistic view of the customer and help encourage them to find room in their budgets for saving and investing.”Issue: consumers aren’t saving enough”

– Susan Menke, Senior Financial Services Analyst

Some questions answered in this report include:

  • Do consumers feel optimistic about the economy and if so how can they be encouraged to save?
  • Are higher income households as financially healthy as they could be?

Consumer spending is a primary driver of economic growth, so consumer optimism about the economy in general is a concern for all marketers. The degree of confidence that consumers exhibit relies on a number of things – particularly things that hit close to home, such as home prices and the price of gasoline. However, there are some very interesting differences between demographic groups in these influences on optimism that impacts purchase decisions, and these are discussed in this report.

Recent economic data are showing that the consumer may be willing to loosen up their purse strings and spend a little. However, the data collected for Mintel’s survey show that indications are mixed, and that consumers are optimistic, but very cautiously so. This report also looks at the factors that impact the level of consumers’ concerns both about the economy and about their own household financial situation. These factors can be important in the messaging that marketers rely on to reach out to these consumers, as well as the types of products that fit well within their financial priorities and their worldview.

This report builds on the analysis presented in Mintel’s Consumers and the Economic Outlook, US, February 2013.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Abbreviations and terms
            • Abbreviations
              • Terms
              • Executive Summary

                  • Is consumer deleveraging finally ending?
                    • GDP and consumer spending
                      • Figure 1: Real Personal Consumption Expenditures, Jan. 1, 2000-Nov. 1, 2013
                      • Figure 2: PCE – Contribution to GDP growth, Jan. 1, 2000-Nov. 1, 2013
                      • Figure 3: Real Personal Income (excluding current transfer receipts), Jan. 1, 2000-Nov. 1, 2013
                    • Household financial health overall hasn’t changed much in the last year…
                      • Figure 4: Current household financial situation, overall, December 2013 and December 2012
                    • …except for higher income households
                      • Figure 5: Current household financial situation, by household income ($150K+), December 2013
                    • Consumers aren’t saving enough – but they are not necessarily concerned about it
                      • Figure 6: Amount in retirement and general savings, by household income, December 2013
                      • Figure 7: Amount in retirement and general savings, by age, December 2013
                      • Figure 8: Attitudes toward personal finances, by household income, December 2013
                    • Even the highest income households are carrying balances on credit cards
                      • Figure 9: Credit card ownership and payment behavior, by household income, December 2013
                    • Consumers are more hopeful for the housing market than last year
                      • Figure 10: Attitudes toward own household situation and overall economy, December 2013
                      • Figure 11: Expectations for household and U.S. economic situation in next 12 months, December 2012
                    • Other highlights
                      • Black consumers continue to be optimistic
                        • Innovations and innovators
                          • What we think
                          • Issues and Insights

                              • Figure 12: Amount in retirement and general savings, by age, December 2013
                              • Figure 13: Attitudes toward personal finances, by gender and age, December 2013
                            • Insights
                              • Issue: optimism about the economy
                                • Insights:
                                  • Issue: Higher income households are not as financially healthy as they could be
                                    • Figure 14: Current household financial situation, by household income, December 2013
                                    • Figure 15: Amount in retirement and general savings, by household income, December 2013
                                    • Figure 16: Credit card ownership and payment behavior, by household income, December 2013
                                    • Figure 17: Household loans, by household income, December 2013
                                  • Insights:
                                  • Trend Application

                                      • Inspire trend: Immaterial World
                                        • Inspire trend: Patriot Games
                                          • Mintel futures trend: Generation Next
                                          • Current Economic Environment

                                            • Key points
                                              • GDP above pre-recessionary levels
                                                • Figure 18: Real Gross Domestic Product, billions of chained 2005 dollars, Jan. 1, 2000 - Sept. 1, 2013
                                                • Figure 19: US GDP quarterly growth rate, Q1 2008 - Q3 2013
                                              • Consumer spending and GDP growth
                                                • Figure 20: Real Personal Consumption Expenditures, Jan. 1, 2000 - Nov. 1, 2013
                                                • Figure 21: Real PCE as a percentage of GDP, 1947-2012
                                                • Figure 22: PCE – contribution to percent change in real GDP, Jan. 1, 2000 - Oct. 1, 2013
                                              • The US consumer and the global economy
                                                • Figure 23: US GDP as a percentage of World GDP/PPP, 2002-12
                                                • Figure 24: Real imports of goods and services, Jan. 1, 1980 - July 1, 2013
                                              • Recovery in the housing market should help investment
                                                • Figure 25: Real private residential fixed investment, billions of chained 2009 dollars, Jan. 1, 2000 - Oct. 1, 2013
                                                • Figure 26: Real private non-residential fixed investment, billions of chained 2009 dollars, Jan. 1, 2000 - July 1, 2013
                                                • Figure 27: Real government consumption expenditures and gross investment, Jan. 1, 1995 - Oct. 1, 2013
                                              • The impact of a slower rate of growth in consumption
                                                • Figure 28: Real retail and foodservice sales, Jan. 1, 2000 - Jan. 1, 2014
                                            • Indications for Future Consumer Spending

                                              • Key points
                                                • Impact of the “Great Recession” on household net worth
                                                    • Figure 29: Total net worth of households and non-profit organizations, Jan. 1, 2000 - July 1, 2013
                                                    • Figure 30: Household net worth as a percentage of DPI, Jan. 1 1953 - July 1, 2013
                                                  • Total real wages now have surpassed 2008 levels
                                                    • Figure 31: Real Personal Income (excluding current transfer receipts), Jan. 1, 2000 - Nov. 1, 2013
                                                    • Figure 32: Productivity (output) per person, nonfarm business sector, Jan. 1, 2000 – July 1, 2013
                                                  • Low interest rates and the wealth effect
                                                      • Figure 33: 30-year fixed rate mortgage average, Jan. 5, 2006 – Feb. 2, 2014
                                                      • Figure 34: Consumer credit outstanding, total, revolving and non-revolving, Jan. 1, 2000 – Dec. 1, 2013
                                                    • Household debt burden – positive indicators
                                                      • Disposable personal income has increased –
                                                        • Figure 35: Disposable Personal Income, Jan. 1, 2000 – Dec. 1, 2013
                                                      • Household debt service ratios have fallen
                                                        • Figure 36: Household debt service payments as a percentage of DPI, Jan. 1, 1980 – July 1, 2013
                                                        • Figure 37: Total household financial obligations as a percent of Disposable Personal Income, Jan. 1, 1980-July 1, 2013
                                                      • Other indicators – consumer sentiment
                                                        • Figure 38: University of Michigan Consumer Sentiment index, Jan. 1, 2000 – Dec. 1, 2013
                                                      • Savings rate reflects a focus on saving rather than spending
                                                        • Figure 39: Personal savings rate, Jan. 1, 2000 – Dec. 1, 2013
                                                      • Stabilization in the housing market
                                                        • Figure 40: S&P Case Shiller 20-city home price index, Jan. 1, 2000 – Nov. 1, 2013
                                                      • Inflation is steady
                                                        • Figure 41: Consumer price index, all urban consumers – all items, Jan. 1, 2000 – Nov. 1, 2013
                                                        • Figure 42: Consumer price index, all urban consumers – medical care, Jan. 1, 2000 – Nov. 1, 2013
                                                        • Figure 43: Consumer price index, all urban consumers – tuition, other school fees and child care, Jan. 1, 2000 – Nov. 1, 2013
                                                      • Gasoline prices may cause concern
                                                        • Figure 44: Weekly US Retail gasoline prices (dollars per gallon), all grades and formulations, 4/5/1993 – 1/3/2014
                                                      • The supply side – credit availability
                                                        • Figure 45: Survey of bank lending officers – net percentage of domestic banks tightening standards on consumer loans, credit cards, 1/1/2000-10/1/2013
                                                    • Marketing Strategies

                                                      • Key points
                                                        • A resurgence in bonus-based marketing
                                                          • The price war moves from new cards to balance transfer deals…
                                                            • …and to checking accounts
                                                              • Figure 46: Wells Fargo direct mail ad, December 2013
                                                            • Source Bank offers $150 to new customers
                                                              • Figure 47: Source Bank direct mail ad, December 2013
                                                            • Regions Bank using cash bonuses to encourage regular saving
                                                              • Figure 48: Regions Bank direct mail ad, December 2013
                                                            • Using bonuses to compensate for low interest rates
                                                              • Figure 49: Chase direct mail ad, December 2013
                                                            • $200 for opening a checking account with Citadel Bank
                                                              • Figure 50: Citadel Bank direct mail ad, December 2013
                                                            • First State Bank appeals to a sense of nostalgia
                                                              • Figure 51: First State Bank direct mail ad, December 2013
                                                            • Discover goes back to rewarding financial activity
                                                              • Figure 52: Discover direct mail ad, December 2013
                                                            • Citibank is making heavy use of bonuses and other incentives
                                                              • Figure 53: Citibank direct mail ad, December 2013
                                                              • Figure 54: Citi direct mail ad, December 2013
                                                              • Figure 55: Citi Simplicity direct mail ad, December 2013
                                                            • Companies are also offering bonuses to new investment customers
                                                              • Figure 56: Capital One 360 direct mail ad, December 2013
                                                            • Vanguard is supporting women
                                                              • Figure 57: Vanguard direct mail ad, December 2013
                                                            • Key Investment Services aims to help Gen Xers plan for the future
                                                              • Figure 58: Key Investment Services direct mail ad, December 2013
                                                            • Targeted savings ads for college saving funds
                                                              • Figure 59: New York State 529 college savings direct mail ad, December 2013
                                                          • Consumers and Household Financial Health

                                                            • Key points
                                                              • Most consumers say their finances are “healthy” or “OK”
                                                                  • Figure 60: Current household financial situation, overall, Dec. 2013 and Dec. 2012
                                                                  • Figure 61: Current household financial situation, by age, December 2013
                                                                • Men of all ages feel more secure than their female counterparts
                                                                    • Figure 62: Current household financial situation, by gender and age, December 2013
                                                                  • Even higher earners are not immune from financial stress
                                                                      • Figure 63: Current household financial situation, by household income, December 2013
                                                                      • Figure 64: Current economic situation of household, by household income, December 2012
                                                                      • Figure 65: Current household financial situation, by race/Hispanic origin, December 2013
                                                                    • Economic prosperity is about personal circumstances, not region
                                                                      • Figure 66: Current household financial situation, by region, December 2013
                                                                    • The advantages of age
                                                                        • Figure 67: Current household financial situation, by generations, December 2013
                                                                      • Twitter users are more positive than most
                                                                        • Figure 68: Current household financial situation, by frequency of visiting social media website, December 2013
                                                                        • Figure 69: Current household financial situation, by frequency of visiting social media website, December 2013
                                                                        • Figure 70: Current household financial situation, by device ownership, December 2013
                                                                    • Consumers’ Financial Resources

                                                                      • Key points
                                                                        • Less than half of consumers have $1,000 in emergency savings
                                                                            • Figure 71: Amount in retirement and general savings, by gender, December 2013
                                                                          • Only half of over-65s have $100k+ in investible assets
                                                                            • Figure 72: Amount in retirement and general savings, by age, December 2013
                                                                          • Younger women are much more likely to be financially vulnerable
                                                                              • Figure 73: Amount in retirement and general savings, by gender and age, December 2013
                                                                            • Savings linked to income – but some high earners are still not saving
                                                                                • Figure 74: Amount in retirement and general savings, by household income, December 2013
                                                                              • A strong racial divide in asset ownership
                                                                                • Figure 75: Amount in retirement and general savings, by race/Hispanic origin, December 2013
                                                                              • Responses hint at the cost of living alone
                                                                                • Figure 76: Amount in retirement and general savings, by marital/relationship status, December 2013
                                                                              • Little regional variation in savings rates
                                                                                • Figure 77: Amount in retirement and general savings, by region, December 2013
                                                                              • Reaping the rewards of a graduate degree
                                                                                • Figure 78: Amount in retirement and general savings, by education, December 2013
                                                                              • The link between financial security and savings
                                                                                • Figure 79: Amount in retirement and general savings, by current household financial situation, December 2013
                                                                            • Consumer Borrowing Behavior

                                                                              • Key points
                                                                                • About a quarter of consumers carry a credit card balance
                                                                                  • Figure 80: Credit card ownership and payment behavior, by gender, December 2013
                                                                                • 25-54-year-olds most likely to carry a high balance on their card
                                                                                    • Figure 81: Credit card ownership and payment behavior, by age, December 2013
                                                                                  • Many higher earners still carry a credit card balance
                                                                                    • Figure 82: Credit card ownership and payment behavior, by household income, December 2013
                                                                                  • Blacks credit card holders most likely to carry a balance
                                                                                    • Figure 83: Credit card ownership and payment behavior, by race/Hispanic origin, December 2013
                                                                                  • A strong link between education and card usage
                                                                                    • Figure 84: Credit card ownership and payment behavior, by education, December 2013
                                                                                  • Some over-extended consumers struggling to clear their card balances
                                                                                    • Figure 85: Credit card ownership and payment behavior, by current household financial situation, December 2013
                                                                                  • Young people are the most likely to be delinquent on loans
                                                                                    • Figure 86: Household loans, by gender, December 2013
                                                                                    • Figure 87: Household loans, by age, December 2013
                                                                                  • More proof that some higher earners are also facing financial strain
                                                                                    • Figure 88: Household loans, by household income, December 2013
                                                                                  • Hispanics are more likely than most to be behind on loan payments
                                                                                    • Figure 89: Household loans, by race/Hispanic origin, December 2013
                                                                                  • Affluent women most likely to be managing their finances responsibly
                                                                                    • Figure 90: Household loans, by gender and household income, December 2013
                                                                                • Spending Behavior

                                                                                  • Key points
                                                                                    • Eight in 10 claim to be able to manage their spending well
                                                                                      • Figure 91: Attitudes toward spending behavior, by gender and age, December 2013
                                                                                      • Figure 92: Attitudes toward spending behavior, by generations, December 2013
                                                                                    • A danger of complacency among younger high earners
                                                                                      • Figure 93: Attitudes toward spending behavior, by age and household income, December 2013
                                                                                    • Reckless spending is having an impact on borrowing levels
                                                                                      • Figure 94: Attitudes toward spending behavior, by credit cardholders – Revolvers and transactors, December 2013
                                                                                    • Is reckless spending a cause of financial stress, or a result?
                                                                                      • Figure 95: Attitudes toward pending behavior, by household loans, December 2013
                                                                                      • Figure 96: Attitudes toward spending behavior, by retirement and savings, December 2013
                                                                                    • Reasons for overspending
                                                                                      • Emergencies and insufficient income are main reasons for overspending
                                                                                        • Figure 97: Reasons for overspending, by gender, December 2013
                                                                                      • Even high earners can be caught out by unexpected expenses
                                                                                        • Figure 98: Reasons for overspending, by household income, December 2013
                                                                                    • Financial and Economic Expectations

                                                                                      • Key points
                                                                                        • Consumers are more optimistic about themselves than about the overall economy
                                                                                          • Figure 99: Attitudes toward own household situation and overall economy, December 2013
                                                                                        • US consumers aren’t convinced that the feel-good factor is returning
                                                                                          • The optimism of youth
                                                                                            • Figure 100: Attitudes toward own household situation and overall economy – net balance of expectations, by gender and age, December 2013
                                                                                          • Further signs of an uneven recovery
                                                                                            • Figure 101: Attitudes toward own household situation and overall economy – net balance of expectations, December 2013
                                                                                          • Black people are much more optimistic about the coming year
                                                                                            • Figure 102: Attitudes toward own household situation and overall economy – net balance of expectations, by race/Hispanic origin, December 2013
                                                                                          • A strong North/South split
                                                                                            • Figure 103: Attitudes toward own household situation and overall economy – net balance of expectations, by region, December 2013
                                                                                          • Male higher earners are particularly optimistic
                                                                                            • Figure 104: Attitudes toward own household situation and overall economy – net balance of expectations, by gender and household income, December 2013
                                                                                        • Household Financial Priorities

                                                                                          • Key points
                                                                                            • Staying on top of bills and paying down debt are main financial priorities
                                                                                              • Figure 105: Household financial priorities in next 12 months, any important by gender, December 2013
                                                                                            • Clearing credit cards is key to all age groups
                                                                                              • Figure 106: Household financial priorities in next 12 months, any important by age, December 2013
                                                                                            • Women are focusing on day-to-day budgeting
                                                                                              • Figure 107: Household financial priorities in next 12 months, any important by gender and age, December 2013
                                                                                            • Saving for the long term is a luxury only open to some
                                                                                              • Figure 108: Household financial priorities in next 12 months, any important by household income, December 2013
                                                                                            • Blacks and Hispanics are looking to pay down their mortgages
                                                                                              • Figure 109: Household financial priorities in next 12 months, any important by race/Hispanic origin, December 2013
                                                                                            • The Swing Generation are less interested in building savings
                                                                                              • Figure 110: Household financial priorities in next 12 months, any important by generations, December 2013
                                                                                            • Lower earners are working hard to make sure bills are paid
                                                                                              • Figure 111: Household financial priorities in next 12 months, any important by gender and household income, December 2013
                                                                                            • Older respondents happy to spend on themselves
                                                                                              • Figure 112: Household financial priorities in next 12 months, any important by age and household income, December 2013
                                                                                          • Financial Goals for Homeowners

                                                                                            • Key points
                                                                                              • Youngest homeowners are most likely to fix up their homes
                                                                                                • Figure 113: Homeowner goals, by age, December 2013
                                                                                              • Three in 10 of the highest earners plan to make a major investment in their home
                                                                                                • Figure 114: Homeowner goals, by household income, December 2013
                                                                                              • Higher level of housing activity among Blacks and Hispanics
                                                                                                • Figure 115: Homeowner goals, by race/Hispanic origin, December 2013
                                                                                              • Higher spending planned in the West
                                                                                                • Figure 116: Homeowner goals, by region, December 2013
                                                                                              • Higher earners are looking to improve their home
                                                                                                • Figure 117: Homeowner goals, by age and household income, December 2013
                                                                                              • 11% of the financially healthy want to buy a second home
                                                                                                • Figure 118: Homeowner goals, by current household financial situation, December 2013
                                                                                            • Attitudes toward the Economy and Economic Success

                                                                                              • Key points
                                                                                                • Respondents less optimistic about the US and its future place in the world
                                                                                                  • Figure 119: Attitudes toward the US and the US economy, December 2013
                                                                                                • Do younger people still believe in the American Dream?
                                                                                                  • Figure 120: Agreement with attitudes toward the US and the US economy, by gender and age, December 2013
                                                                                                • Higher earners have greater faith in the old certainties
                                                                                                  • Figure 121: Agreement with attitudes toward the US and the US economy, by household income, December 2013
                                                                                                • Blacks and Hispanics have greater faith in the impact of government intervention
                                                                                                  • Figure 122: Agreement with attitudes toward the US and the US economy, by race/Hispanic origin, December 2013
                                                                                              • Attitudes toward Personal Finances

                                                                                                • Key points
                                                                                                  • Young people, men in particular, seem delusional about finances
                                                                                                    • Figure 123: Attitudes toward personal finances, by gender and age, December 2013
                                                                                                  • Retirement planning is a luxury only higher earners can afford
                                                                                                    • Figure 124: Attitudes toward personal finances, by household income, December 2013
                                                                                                  • Healthcare and insurance costs worrying Boomers
                                                                                                    • Figure 125: Attitudes toward personal finances, by generations, December 2013
                                                                                                  • Graduates are trying to make plans for retirement
                                                                                                    • Figure 126: Attitudes toward personal finances, by education, December 2013
                                                                                                  • Even the financially healthy are rethinking their spending habits
                                                                                                    • Figure 127: Attitudes toward personal finances, by current household financial situation, December 2013
                                                                                                • Political Affiliation and Attitudes toward the Economy

                                                                                                  • Key points
                                                                                                    • One third identify themselves as Democrats
                                                                                                      • Figure 128: Political affiliation, by gender, December 2013
                                                                                                      • Figure 129: Political affiliation, by age, December 2013
                                                                                                    • Older people more likely to say they vote Republican
                                                                                                      • Figure 130: Political affiliation, by gender and age, December 2013
                                                                                                      • Figure 131: Political affiliation, by generations, December 2013
                                                                                                    • A pronounced income split…
                                                                                                      • Figure 132: Political affiliation, by household income, December 2013
                                                                                                    • …and a clear divide across racial and ethnic groups
                                                                                                      • Figure 133: Political affiliation, by race/Hispanic origin, December 2013
                                                                                                    • People who are struggling tend to favor Democrats
                                                                                                      • Figure 134: Political affiliation, by current household financial situation, December 2013
                                                                                                    • People who expect their incomes to rise more likely to vote Democrat…
                                                                                                      • Figure 135: Political affiliation, by attitudes toward own household situation and overall economy – Your household’s income, December 2013
                                                                                                    • …as are those who expect unemployment to fall
                                                                                                      • Figure 136: Political affiliation, by attitudes toward own household situation and overall economy – U. S. unemployment rate, December 2013
                                                                                                      • Figure 137: Political affiliation, by attitudes toward own household situation and overall economy – US taxes, December 2013
                                                                                                      • Figure 138: Political affiliation, by attitudes toward own household situation and overall economy – US inflation, December 2013
                                                                                                      • Figure 139: Political affiliation, by attitudes toward own household situation and overall economy – US economic growth, December 2013
                                                                                                      • Figure 140: Political affiliation, by attitudes toward own household situation and overall economy – US stock prices, December 2013
                                                                                                    • Democrats tend to have a more positive view of the US’s economy
                                                                                                      • Figure 141: Political affiliation, by agreement with attitudes toward the US and the US economy – Any agree, December 2013
                                                                                                      • Figure 142: Political affiliation, by agreement with attitudes toward the US and the US economy – Any agree, December 2013
                                                                                                      • Figure 143: Amount in retirement and general savings, by political affiliation, December 2013
                                                                                                  • Attitudes toward the Affordable Care Act

                                                                                                    • Key points
                                                                                                      • Few people know much about ObamaCare
                                                                                                        • Figure 144: Attitudes toward the ACA and impact on the economy, by gender and age, December 2013
                                                                                                        • Figure 145: Attitudes toward the ACA and impact on the economy, by race/Hispanic origin, December 2013
                                                                                                      • The Swing Generation is less forgiving on healthcare premiums
                                                                                                        • Figure 146: Attitudes toward the ACA and impact on the economy, by generations, December 2013

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                                                                                                    Consumers and the Economic Outlook - US - February 2014

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