Here’s an underlying issue for a consumer-driven economy: a change in demographics will reduce the volume of consumer spending.
From Nielsen’s research blog:
CPG Spending Declines
As population growth slows in the U.S., so will spending on consumer products. Household size will decline across the board, the largest families will be smaller and a large share of the population will live in one or two person households. Nielsen projections demonstrate that households closest to the poverty line will gain in share at the expense of all other households, but especially those in the middle and upper middle classes, who will shrink the share the most. The impacts of these two trends means that after 2020, Nielsen projections show per household spending on packaged goods will begin to fall. The current recession is already impacting spending in the short-term. Growth will be very hard to come by both now and in the coming decades.
So, while the global population will continue to grow, the U.S. population will slow, and households with children under 18 will drop to 30% of all households by 2020.
Another data point supporting the assertion that the economy that we had for the last 20 years isn’t the right economy for the next 20 years. Consumer consumption is not only experiencing a short-term change, but is manifesting a trend that will continue over the long term.
