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There's no longer an average American consumer. Although millions of people have lost their jobs over the past two years and cut back on purchases, many affluent people have continued to spend freely on new cars, second homes and other luxury goods despite the uncertain economic outlook.

Consumer spending is still growing, but the rate of growth has varied significantly from year to year and from sector to sector, depending on shifting wants or needs. Anticipating these shifts is why we pay such close attention to consumer trends. The objective is to be ready to allocate resources to those products or services that will be increasingly in demand, and away from those for which demand is likely to shrink.

The following list includes 10 ways in which American consumers are changing. It should help businesses gauge the sectors most likely to benefit from the dominant trends in the year — and years — ahead. Several of these shifts have been developing for some time and will not come as a surprise. Others are just becoming evident and may have a major impact on numerous businesses, including travel, youth-oriented health and fitness firms, small-business services and baby-related goods and services.

  1. Aging Boomers

    As Baby Boomers grow older, their impact on consumer spending can hardly be overstated. That's because unlike previous generations, Boomers are quite fervent in their efforts to delay the aging process and will likely continue to earn and spend as they age.

    The first Baby Boomers turned 55 in 2001. During the next decade, the 55- to 64-year-old age group will be transformed as it fills with 38 million Boomers. That age range will have the highest growth rate (4 percent to 5 percent per year) of any 10-year age cohort, and this group's household income and spending are also likely to increase rapidly.

    Household income and spending within the 55- to 64-year-old group has been about 15 percent lower than that of 45- to 54-year-olds. The diminished economic activity was due in large part to lower rates of participation in the labor force. But this probably won't be the case with Boomers, who, because of their higher educational attainment, are far more likely to remain fully employed as they enter their 60s. So neither income nor spending is likely to shrink as much for Boomers as it did for past generations of 55- to 64-year-olds — if it shrinks at all.

    This will be good news for full-service restaurants as well as for the travel industry and builders of second homes. Health and fitness businesses that strive to help Boomers look and feel younger are also likely to do very well over the next couple of decades. But it remains to be seen exactly how 55- to 64-year-old Boomers might shift their spending habits when many of them become grandparents and when some of them start caring for their own aging parents.

  2. Delayed retirement

    Baby Boomers delayed every life stage transition, such as getting married and having children. It is therefore highly likely that they will also delay their retirement. Many Boomers have not saved enough for this milestone, and the age at which full Social Security benefits will kick in for them has risen to 66 — or 67 for later Boomers.

    An equally important reason why Boomers will delay retirement is that much greater numbers of the men and women now aging into the preretirement cohort of 55- to 64-year-olds have higher educational attainment and higher-paying professional careers than previous generations.

    As a result, Baby Boomers are unlikely to abandon their careers as early as prior generations did. Even after they reach age 66 or 67, people who work at high-paying white-collar jobs will probably continue to work full- or part-time, for the monetary — and the psychic — benefits. Between 2000 and 2010, the Bureau of Labor Statistics forecasts a 33 percent increase in the number of people ages 65 to 74 in the work force.

  3. The changing nature of work

    Census 2000 was the first census to record that more than half of all workers are employed in management, in professional or related occupations, or in a sales or other office-based position. At the same time, vast numbers of employees have Internet access at work and can shop from their desks.

    Workers are also continuing to pursue educational opportunities even after they have established themselves in careers. People used to invest in their education only when they were young, but now they seek additional educational services throughout their lives.

    The rising number of white-collar workers, the increased use of independent contractors by corporations and the ability to sell and deliver products using the Internet have contributed to the growth in the number of people who are self-employed either part-time or full-time. This expansion in the ranks of entrepreneurs will likely result in a greater demand for small-business services provided by such firms as Kinko's.

  4. Greater educational attainment — especially among women.

    With so many jobs requiring more intellectual than physical skills, it should not be surprising that the number of high school graduates attending college is rising. Nearly two-thirds of those who complete high school now enroll in college within 12 months of graduation. There is little doubt that the college experience has a lasting influence on consumer behavior, if only because people with higher education also have a substantially higher lifetime income.

    Perhaps the most important aspect of this trend is the rising number of women pursuing higher education. Men and women are equally likely to graduate from high school, but women are more inclined to go to college. According to the National Center for Education Statistics (NCES), 37.2 percent of women between the ages of 18 and 24 were in college in 2002, versus 30.7 percent of men.

    Since 1992, there has been an 11 percent increase in the number of women in college, but in that same 10-year period, the number of men in college edged up only 3 percent. As a result, more than half (54 percent) of college students who are 18 to 24 years old are women, even though women make up less than half (49 percent) of young adults in that age group. By 2012, the NCES projects there will be a million more women than men in that age group in college.

    The long-term impact of this trend will be to increase women's lifetime earning power. This is a particularly important development, because women, on average, live 8 to 10 years longer than men. This means they will need that increased lifetime earning power to sustain themselves in their later years. We may see women spending more of their increased earnings on private education for their children as well as on personal goods for themselves.

  5. Looming labor shortages

    Although more service workers are needed in growing suburban areas, fewer of them can afford to live there. The lack of service workers in suburban areas means that these locales will likely turn to service automation and that there will probably be an increased demand for building and landscaping materials requiring little maintenance. Labor shortages in critical occupations, such as nursing, will also likely lead to a greater reliance on workers recruited from abroad.

  6. Increased immigration

    There is little doubt that immigration will become an ever greater determinant of U.S. population growth. Based on Census 2000, the Census Bureau estimated that 40 percent of the nation's population growth was due to immigration. As our citizens age, the population growth from newborns will be outpaced by the growth due to immigration.

    The majority of immigrants over the next decade are expected to come from Latin America, primarily because of its proximity and the youthfulness of its population. Based on past rates of job growth, not enough jobs will be created in Latin America to accommodate the 50 million to 60 million teenagers in that region who will become adults over the next decade. Many of them will find work here in the service sector. This will put a higher premium on managers who can speak Spanish and Portuguese.

  7. Rising Hispanic influence

    Already the largest minority group in the U.S., with 35 million people, the Hispanic population is projected by the Census Bureau to increase 35 percent in this decade. And that's in addition to the 58 percent increase during the 1990s. Hispanics now represent about one-third of the population in California and Texas, and nearly half the residents of New Mexico.

    The median age of the Hispanic population is 25.8, nearly 13 years younger than that of the non-Hispanic white populace in the U.S. And though Hispanic households represented only about 9 percent of U.S. households in 2000, they accounted for 20 percent of the 4 million children born in this country that year. Larger households spend more on food and clothing as well as on other items for children. Thus, metro areas with large and growing numbers of Hispanics are likely to benefit from higher than average retail sales in the future.

  8. Shifting birth trends

    There are three components of change in the number of births across the country.

    The first is the increasing incidence of births to older women. The number of births to women age 35 and older has jumped nearly 50 percent in the past decade, and more of those are multiple births. The growth in total births — combined with the rising number of older new mothers (who have higher household income) — mean that spending for baby-related goods and services is greatly increased.

    The second component is the declining number of births to teenagers. According to the National Center for Health Statistics, the birth rate for women under age 20 dropped nearly 20 percent during the past decade. However, because of the increased number of teens, the total births to teenagers declined just 10 percent.

    The third component of this trend is the rising diversity among young children. About two-thirds of women of childbearing age in this country are non-Hispanic whites, but they accounted for less than half (43.5 percent) of the births in 2000. Therefore, over time, more than half the children in U.S. public schools will either be Hispanic, African American, Asian or another race. This is already the case in California, Florida and Texas.

  9. Widening geographic differences

    This trend has two elements: the increasing demographic difference between cities, suburbs and rural areas, and the rise of distinctive regional consumer markets. Very low population growth in New England, for example, has lead to a median age of 37.1 in that region, compared with a median age of 32.3 in Texas and 33.3 in California. Also, the non-Hispanic white population is 84 percent of the total population in New England but only 53 percent of the population in the West.

    Half of all Americans now live in suburban areas (inside metropolitan areas, but outside the central cities), 30 percent live in the central cities of metro areas and the remaining 20 percent live outside of metropolitan areas, in rural locales. Population is growing most rapidly in suburban areas and the slowest in rural areas. The minority population is highest in central cities (49 percent) and lowest in rural areas (18 percent).

    Median age is lowest in central cities (32.7), compared with 36.1 in the suburbs and 37.2 in rural areas. Half of suburban households have an annual income exceeding $50,000, compared with 36 percent of central city households and only 30 percent of those in rural areas.

    The rising contrast between U.S. cities and suburbs, combined with the widening differences in consumer markets between regions, suggest that more distinctive regional and local marketing will increasingly take precedence over national marketing efforts.

  10. Changing age structure

    Since the Baby Boom began in 1946, we have seen very large increases in the number of people and households in each successive age cohort as Boomers entered those stages. The big increase in the 55- to 64-year-old age group is only the latest example.

But in the future, the differences in size between one age cohort and the next will be much smaller. For example, Census 2000 counted 20 million Baby Boomers ages 45 to 49 but only 13.5 million pre-Boomers in the five-year age cohort of those 55 to 59, a 48 percent difference.

That same census, however, found between 18.6 million and 20.5 million people in every five-year age cohort between ages 5 and 34 — a mere 10 percent difference. So, over the next decade, there is likely to be only a slight change, 1 percent or less annually, in the number of consumers in each age cohort younger than 35.

As a result, the impact of the 71 million Echo Boomers, those ages 8 to 25, may not be as great as that of their parents simply because there are about as many of them as there are in the big generation that came before them. Echo Boomers will undoubtedly make a splash, but it will be because they may act differently as consumers from Gen X and Boomers, not because of sheer size.

The degree to which each of these trends will affect firms that sell consumer goods or services depends on numerous factors, such as who their customers are and how a firm adapts to shifts in its client base. However, it's clear that the firms that are most aware of how customers are changing are the ones that will be best poised to capitalize on the trends shaping the consumer landscape in the years ahead.

Peter Francese is the founder of American Demographics. He can be reached at [email protected].


The South, the largest region, has gained the most households, while the West is the most diverse region and has a populace with the youngest median age.

Northeast 19.2% +7.5% 36.8 73.4%
Midwest 23.5% +10.8% 35.6 81.4%
South 36.0% +19.5% 35.3 65.8%
West 21.3% +18.5% 33.8 58.4%
All regions 100.0% +14.7% 35.3 69.1%
Source: Census 2000


Wide differences in size from one age group to another are diminishing — a trend likely to continue in the next decade. If Echo Boomers (ages 8-25) make a splash, it won't be based on sheer size alone.

5-9 20.55
} 0.02 0.1%
10-14 20.53
} 0.31 0.2%
15-19 20.22
} 1.26 6.6%
20-24 18.96
} 0.42 2.3%
25-29 19.38
} 1.13 5.5%
30-34 20.51
} 2.20 9.7%
35-39 22.71
} 0.27 1.2%
40-44 22.44
} 2.35 11.7%
45-49 20.09
} 2.50 14.2%
50-54 17.59
} 4.12 30.6%
55-59 13.47
} 2.67 24.7%
60-64 10.80
Source: Census 2000
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