Press Releases: 2013-10-21
October 21, 2013
For Immediate Release
564 words (main text only)
Affluent’s View of Economy at 6 Year High in New Survey;
Indicates Good Potential for Increased Spending
The assessment of current business conditions (index of 93) rose 22 points to neutral territory from the Spring 2013 survey and is now 40 points above the Fall 2012 index in a new survey by the American Affluence Research Center of the wealthiest 10% of U.S. households that account for almost half of all consumer spending. This is the highest reading for this index since Fall 2007 (108) and indicates good potential for increased spending by affluent and luxury consumers.
The index for future business conditions (105) and the index for change in the stock market (106) are both in positive territory and essentially unchanged from the Spring 2013 survey. This is contrary to the pattern in 2011 and 2012 when all three indexes were generally higher in the Spring than in the preceding and subsequent Fall surveys. The affluent seem to have a modestly better outlook for the future than the general public.
About 80% expect their net worth to be the same or higher in the coming months while two-thirds expect their income to be the same or better. Almost two-thirds say they do not plan to defer or reduce expenditures during the next 12 months, which represents an improvement of 7 percentage points from Spring 2013 survey.
Expectations regarding future income and net worth influence and/or correlate with spending plans. For example, the average index for changes in spending plans is 44% higher for those expecting an increase or no change in their net worth versus those expecting a decline in net worth. The difference is 20% based on income expectations.
Some of the highlights of the special topics covered in this survey include: 89% of the women and 72% of the men expect to receive a holiday gift this year. The most popular items on the gift wish list are some form of “currency” (a gift card/certificate or money/check) among 47% of the women and 43% of the men. Clothing is the second most named item among women (40%) and men (33%).
Among the affluent households, the average expenditure for holiday gifts in 2013 is estimated to be $2,175 (a decline of 2.8% from 2012). However, it appears the affluent spent in 2012 almost 7% more than they had anticipated in the 2012 survey, thus supporting the premise that people often tend to spend more for gifts than they had planned.
The expenditure per affluent household for gifts is about four times that of all households as estimated by the National Retail Federation, which has forecast a 3.9% increase in total retail holiday gift sales for this year.
There appears to be great untapped sales potential for luxury brands among the affluent. Brand ownership/experience during the past five years, brand familiarity/knowledge, and brand impressions or perception were measured for 17 different luxury brands. The level of ownership and familiarity for almost all brands was lower than what might be expected among this affluent group. When combining ownership/experience with familiarity/knowledge, the total for each brand is generally in the range of low 50s percentage to mid 60s percentage of the affluent (see exhibit below).
This data illustrates the importance of screening for respondent usage, ownership, and familiarity in any type of brand rating research. It appears that much brand research should be used with caution, as it does not screen respondents in this way or distinguish between the responses of those with experience or knowledge of the brand and those that do not.
A complimentary copy of the 74-page, 76-exhibit report is available to the media.
Key findings and highlights of the survey can be viewed here. The survey is based on a projectable national sample of 327 respondents representative of 11.4 million U.S. households with a minimum $800,000 net worth. The respondents reported an average income of $295,000 per year and average net worth of $3.1 million. The average value of their primary residence is $1.3 million.
About Us: Established in 2001 and with an exclusive focus on the affluent market, The American Affluence Research Center conducts the original and only continuous twice-yearly tracking studies of the mood and future spending plans of the wealthiest 10% of U.S. households based on net worth. AARC has become a recognized authority and a credible source of reliable insight and marketing information about the values, lifestyles, attitudes, and purchasing behavior of America’s most affluent consumers.