By Karlene Lukovitz
Given most American consumers' continuing struggle to make any financial headway, even six years after the start of the recession, their reluctance to make impulse purchases, including magazines, is not surprising, stressed Craig Matters, former managing editor of Time Inc.'s Money, during Tuesday's general session at the annual Magazines at Retail Conference, sponsored by the Periodical and Book Association of America (PBAA) and MPA-The Association of Magazine Media.
Matters’s key points:
1. The typical newsstand buyer is 48 years old and married, with a median household income of $73,000—substantially higher than the U.S. median household income of $55,000. Last October, 70% of Americans in this low-$70,000's bracket told the Federal Reserve that they’re doing “well” or “OK.”
2. However, 60% of Americans said that they expected no change in their income in the year ahead (2014-2015). Just 30% expected their income to rise, and by an average of just 2%. Also, fewer than 60% said that they are better off financially than their parents were—down from percentages that were in the 80's and 70's during the 1990’s and 2000’s.
3. The overall pace of economic growth in the U.S. during this recession's recovery is just about half of the recovery pace seen after previous recessions: 13.3% versus 26.9%. "The economy has been growing at about 2% for six years--a barely rising tide," said Matters.
4. Americans’ overall wealth declined on average by 40% between 2007 and 2010, mostly due to the housing collapse, but also investment losses. And while the stock market has rebounded and housing prices are rising slowly, 80% of Americans have seen their income stagnate or decline since 2000, in real terms. Similarly, a Bloomberg analysis of Federal Reserve data found that, in real terms, the typical household's wealth made no gains, or even declined a bit, between 1995 and 2010. "Overall, we've had 21 years of the typical household's net worth not going anywhere," said Matters. Little wonder, then, he pointed out, that about 40% of Americans also say that they’ve permanently changed the way that they view spending.
5. 30% of Americans told the Federal Reserve last fall that they’re living paycheck to paycheck, at least some of the time. And just last week, 30% of Americans told Gallup that jobs are still hard to get.
"The reality is that, six years into recovery, people still aren't optimistic about the economy or their prospects," Matters summed up. "The various economic indicators are up and down from day to day. I believe that people will need to see about six months of consistently good economic news, plus some wage increases, before they will be optimistic and start spending more again."
Matters also refuted seven common misconceptions about Millennials, or "Gen Y":
1. Myth: They’re “kids.” Reality: The oldest Millennials are turning 35 this year, and the biggest bulge within this generation will be turning 25 within the next couple of years.
2. Myth: Gen Y is not as large as the Baby Boomer generation. Reality: Currently, there are 87 million Millennials, versus 76 million Boomers (and Boomers are, of course, dying off). Matters also noted that whereas 72% of American Millennials are white, just 56% of Millennials are white, and that Millennials are the best-educated and most tech-savvy generation in history. "These are important points to keep in mind when you're thinking about newsstand dynamics and how to sell magazines to Millennials," he said.
3. Myth: Millennials live in their parents’ basements. Reality: Not so true anymore. While the rate of new household formation fell significantly during the height of the recession, about 1.6 million new households are being formed per year now--about the same number as prior to the recession.
4. Myth: They’re bad with money. Reality: Millennials are very conservative with their money, and they save money. They aren't big on participating in the stock market, but that's because they wisely realize that their first priority needs to be building an emergency fund, Matters said.
5. Myth: College debt will crush them. It's true that Millennials are more burdened than Boomers in this respect: The cost of a college education is about twice what it was in the 80's. "But the advantage gap of having a college education versus a high school education is also bigger than ever, so their investment in college should pay off over the years," Matters noted.
6. Myth: They’re broke. Reality: "Millennials are making about the same as Boomers did, but they're paying more in housing and other living costs, so their peak spending years are being delayed. But they will catch up over the long term," he said.
7. Myth: They’re horrible employees. Reality: Millennials are actually more loyal to employers than their predecessors, Gen X-ers, were. They're less likely to leave a company after one year, and they're more likely to stay for three to six years.