The Importance Of This Market

This week, we’re releasing our latest analyses of two widely cited government surveys: the 2010 Survey of Consumer Finances (a triennial study from the Federal Reserve Board), and the 2011 Consumer Expenditures Survey (an annual study from the Bureau of Labor Statistics). Our analyses of the raw unpublished data from these surveys paint a definitive portrait of wealth and spending concentration in America.

Our results show that Affluents – those with $100K+ in annual household income (HHI) – are 18% of U.S. families, and they hold 69% of consumer net worth. Affluents account for 35% of total U.S. consumer spending, a figure that rises to more than half in categories such as ship fares (74%), watches (63%), charitable contributions (62%), hotels (52%), airfare (51%), and men’s suits (51%). Affluents also disproportionately spend in dozens of other categories, including those as diverse as college tuition (47%), streamed/downloaded video (45%), dinner at full-service restaurants (42%), and newspaper/magazine subscriptions (34%). 

We define Ultra Affluents as those with $250K+ HHI. Our analysis of the 2010 Survey of Consumer Finances estimated them to be 4% of U.S. families, holding a remarkable 43% of consumer net worth. Our analysis of the 2011 Consumer Expenditures Survey found Ultra Affluents to be 2% of the population, accounting for 7% of consumer spending, a figure that rises significantly across a range of categories including watches (24%), charitable contributions (20%), club memberships (18%) and what the government somewhat archaically calls “personal digital assistants” (13%). 

Taken together, our analyses of these 2010 and 2011 government surveys confirm that, in post-recession America, Affluents continue to account for the bulk of American net worth, and a disproportionate amount of consumer spending. Understanding Affluents increasingly has relevance for any category, not just luxury apparel or financial services; a bi-furcated economy increasingly calls for bi-furcated business strategies.

Looking ahead, Affluents are likely to see their potent economic influence continue. Their personal and professional decisions remain a crucial engine of economic growth. Their pace of spending will disproportionately shape the economic recovery. Their investment decisions will disproportionately shape financial and real estate markets. Professionally, Affluents (particularly Ultra Affluents) skew toward executives and entrepreneurs – in other words, their business decisions to expand or hire disproportionately shape economic and job growth. They are a truly important market, indeed.

Tags: affluent
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