“Even the darkest night will end and the sun will rise.” Victor Hugo, Les Misérables
As 2013 moves into its second half, we find that the Affluent mood has lightened significantly. We’re not yet seeing an unbridled optimism, or a return to 2006-era carefree spending. But we are seeing an appreciable drop in pessimism across a variety of metrics, as well as growing spending and luxury interest in many marketplace categories.
We define Affluents as adults with $100K+ in annual household income; approximately 20% of the U.S. population, Affluents hold nearly 70% of the net worth, and account for a majority of consumer spending in many categories. Consider these half-dozen signs of a lightening Affluent mood from our latest surveys:
1. Economic pessimism drops: Pessimism about the economy dropped four percentage points in June, to 36%, while optimism remained stable at 42%. Also dropping: unemployment concerns, continuing a trend seen throughout much of 2013.
2. More seeing light at the end of the tunnel: “Recessionary mindsets” are becoming less common, and a growing number feel that the recession is over for themselves and their families.
3. Less uncertainty-fueled investing: It’s often said that the stock market hates uncertainty, and I’ve often pointed out that gold loves uncertainty. After a long-running bull market for gold, the percentage of Affluents considering gold to be an excellent or good investment at this time dropped to 43% – into a three-way statistical tie with stocks and real estate.
4. Broadening luxury interest: For many months, our indicators have suggested luxury spending growth for Ultra Affluents ($250K+ HHI); June 2013 marked the first month in which our indicators suggested luxury spending growth among the broader group of Affluents as well.
5. Travel taking off: As summer began, more Affluents were expecting to take summer vacations. Also trending up: longer trips, beach vacations, trips to major cities (both domestic and international), and visits to wineries/vineyards. Trending down: driving vacations, and visits to family/friends.
6. Auto interest accelerating: Our Barometer data suggest that Affluent interest in luxury autos is on the rise, as is their interest in paying cash for vehicles. These findings dovetail with auto industry data released in July which found auto sales to be returning to pre-recession levels.
Clearly, the Affluent mood is lightening. If these trends continue, the mood of Affluent-focused marketers will lighten as well.