It's Now 2016 - Looking Forward And Back

2016 is here, and many people have been asking us two questions:

  • What’s our current forecast for the affluent market for 2016; and
  • How did it fare during 2015?

Our answers follow.

What’s our current forecast for the affluent markets for 2016?

A year ago, we were quite positive that 2015 would be better than 2014 for the affluent marketplace in the United States. Based on what we have seen, it has definitely been quite encouraging. Now, as 2015 has come to a close and we think about what will occur during 2016, our point of view is that the segment we follow (those adults who live in households with household incomes of $75,000 or more — the top 44% of adults, who now number 106 million) will most likely do better again next year. However, a few caveats follow. 

There are a number of storm clouds in the sky as we see 2016 evolving. We envision almost as much potential downside in the affluent marketplace compared with the potential upside. As far as upside goes, there is the chance that the many improvements to the economic environment that occurred in 2015 will continue in 2016 (e.g., the declining unemployment rate, the continuing decline in oil and gasoline prices, the relatively high level of consumer confidence, etc.). To the extent that they do, we should see affluent consumers continue to spend, assuming of course that no more truly negative and distracting events occur (e.g., another and more devastating terrorist attack here, a major country defaulting on its debts, a major financial institution failing, etc.). 



Where do we foresee potential downside for the American providers of upscale products and services during 2016? It starts with the current value of the dollar and how its rise has been depressing the number of visitors to the United States who, until recently, have been major buyers of luxury and premium goods and services while they were here. In addition, a fair number of affluent Americans still feel constrained by their relatively small salary increases in recent years, while a good number were also rattled by the San Bernardino terrorist attack and are now concerned about their safety, resulting in many now buying guns and holding onto their money.

Also, the decline in oil and gasoline prices to date has in many respects been deposited into consumers’ savings accounts and not into retailers’ cash registers. Another unknown is what the Federal Reserve will be doing to interest rates during 2016 and what those actions, if any, will do to housing-related markets. Finally, 2016 is a presidential election year. Based on what we have seen and heard to date, we really have no idea how the candidates' statements and promises during the next 10 months will impact affluent consumers’ spending plans.

How did the affluent market fare during 2015?

The year was very positive for the affluent marketplace, as a large new number of affluent adults entered the upscale marketplace and spent some of their hard-earned discretionary incomes and wealth on the luxuries and premium goods and services that we track. That number is impressive (43 million compared to 27 million in 2014, an increase of 59%). So, what did these affluent consumers buy? Which affluent categories grew during 2015 compared to 2014? Our next column will provide the details. Stay tuned.

1 comment about "It's Now 2016 - Looking Forward And Back".
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  1. Ronald Kurtz from American Affluence Research Center, January 6, 2016 at 11:16 a.m.

    Formulas used by demographic statisticians usually classify households as middle class if they have an income of 67% to 200% of median income. In most metro areas, that means an income of $100K+ is required to be considered affluent. In NYC and other major metro areas, such an income would barely cover typical monthly expenses. Anything less than $200K would probably leave very little for discretionary expenses, especially true luxury items. 

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