According to Mintel’s annual comparative audit report, American Lifestyles 2014, renewed consumer spending is in line with pre-recession trends and consumer optimism is higher than it’s been in years. The outlook for 2014 continues the positive trend with spending expected to increase further by 3.6%, more than three times the projected rate of inflation for the year.
Fiona O’Donnell, category manager at Mintel, says “… after five years of slow growth… Americans have passed the tipping point of prolonged economic worry… cautiously accepting that things are better… confidence in personal finances… (allows) consumers to think about the future and look forward rather than linger over the past.”
The report forecasts that total US consumer expenditures will grow by 20% from 2013-2018 to reach $12,025 billion. The categories that appear to poised to show the greatest gains over the next five years are many of the same ones that performed the strongest from 2012-13:
Over the course of one year, the share who say they spend extra money on vacations nearly doubled. This is the greatest gain for any one area of consumer spending and is a sign of improved finances, or at least optimism, says the report.
Fiona notes that “Adults aged 18-24, in particular, are looking at the world around them and see all the possibilities ahead. Owing in part to social media and the ability to share instantaneously with others, young adults are placing a higher value on ‘experiences’ as opposed some of the more traditional purchases of their parents’ generation. A desire for experiences over stuff, coupled with a record number of Baby Boomers reaching retirement, has seen expenditures on categories such as dining out, vacations, leisure & entertainment.and alcohol outpace spending overall, a trend that is expected to continue over the next five years.”
Americans are also focused on self-improvement for 2014. Top goals for 2014 include:
Breaking down some of the winning categories paints a pictureof optimism and growth…
Vacations and tourism spending has outpaced total US consumer expenditure growth and, over the next five years, steady growth is expected in this, with total expenditures forecast to reach $282.4 billion by 2018, a 27.3% increase over 2013 spending.
It appears that Americans are more likely to indulge in vacation spending, says the report. While previously, 41% of respondents indicated they were spending less on vacations than they had in the year before, this share has now declined dramatically to just 30%. Baby Boomers are a driving force behind vacation spending, though families headed by young Millennials will also contribute to the market.
Leisure and entertainment is the star performer with expenditures forecast to increase by 28.5% to reach $431.6 billion in 2018, nearly $150 billion more than the total forecast for vacations and tourism.
Similar to vacations and tourism, young adults, particularly men aged 18-34, are most likely to say they are spending more on Leisure and entertainment, says the report. In 2013, nearly half of the spending in this sector is attributed to membership dues for clubs, and fees associated with sports centers, parks, theaters, and museums.
Millennials’ average spend per year on entertainment is about $716 dollars less than the average American’s. Despite this difference, Millennials have increased their spending on leisure compared to prior years and plan to spend more in the coming two years. The 18-24 age group is more likely to experience this leisure time alone.
As the relatively wealthy Baby Boomer generation moves on to its next life stage (retirement), this group will have more time to devote to leisure and entertainment. In 2014, the youngest of the Boomers turns 50. At 76-million strong, their shift from the work place to leisure space will positively impact the category.
“Consumer spending for leisure and entertainment will continue to increase over the next five years. Growth will be impressive with spending in the sector expected to outpace all others as recessionary cut-backs fade from memory. The importance of ‘affordable play-time’ is recognized as a priority for Americans – regardless of demographics or financial standing,” says Fiona.
Many of the staple consumer electronics products and services have struggled to maintain their historically high growth levels, due largely to market saturation for electronic items such as televisions and the consolidation of functionality to multipurpose devices. Aside from smartphones (two out of three consumers own one), and tablets (four out of 10), the rate of increase in consumer spend on hardware and electronic equipment has slowed considerably.
With more content going digital, consumer interest in streaming, VOD (video-on-demand) and other internet media will rise rapidly, with projected sales of streaming TV and movies doubling between 2013 and 2018, says the report. Furthermore, nearly half of consumers reported they watched some form of streaming video (purchase, rental or free) in 2013.
Bryant Harland, technology analyst at Mintel, concludes that “… many segments of technology and communications are at a turning point… given the prevalence of hardware in consumers’ lives… amajor emphasis for 2014 will be on the quality of the software and services that those devices provide access to rather than the hardware itself… “
To access this report for additional information from Mintel, please visit here.