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Americans appear ready to move on from worrying about the recession and one thing seems clear: They need a vacation. Mintel’s annual comparative audit report, American Lifestyles 2014, suggests that renewed consumer spending is in line with pre-recession trends and consumer optimism is higher than it’s been in years. In 2013, Mintel estimates that personal consumption expenditures on consumer goods reached $10 trillion for the first time. The outlook for 2014 continues the positive trend with spending expected to increase further by 3.6 percent—more than three times the projected rate of inflation for the year.
In 2014, just one in 10 Americans say that they don’t spend extra money—that they save it; a similar share say that they “never” have any extra money. These sentiments are in stark contrast with 2013 and 2008 survey results when the share of savers was at least double. Meanwhile, all the saving and responsible spending appears to have paid off. Those who say they never have any extra money has declined since 2008 from 15 percent to 12 percent in 2014.
“In 2014, it appears that America has finally stopped holding its collective breath, waiting for the other economic shoe to drop,” says Fiona O’Donnell, category manager of multicultural, lifestyles, and leisure at Mintel. “After five years of slow but steady growth, Americans have passed the tipping point of prolonged economic worry and have cautiously accepted that things are better. Confidence in personal finances has allowed consumers to think about the future and look forward rather than linger over the past.”
Mintel forecasts that total US consumer expenditures will grow by 20 percent from 2013–2018 to reach $12,025 billion. In comparison, expenditures increased just 15 percent from 2008 to 2013 (with a 1.5 percent decline 2008–09). The categories that appear to poised to show the greatest gains over the next five years are many of the same ones that performed the strongest from 2012-13: nonessentials such as leisure and entertainment (+28.5 percent), vacations and tourism (+27.3 percent), technology and communications (+25.2 percent) and alcohol on premises (+23.7 percent).
Over the course of one year, the share who say they spend extra money on vacations nearly doubled. This is the greatest gain for any one area of consumer spending and is a sign of improved finances – or at least optimism since, when money is tight vacations are often one of the first discretionary areas to be cut from the budget.
“One of the common themes noted across different sectors examined in the report is that optimism is a hallmark of youth,” O’Donnell says. “Adults aged 18–24, in particular, are looking at the world around them and see all the possibilities ahead. Owing in part to social media and the ability to share instantaneously with others, young adults are placing a higher value on ‘experiences’ as opposed some of the more traditional purchases of their parents’ generation. A desire for experiences over stuff - coupled with a record number of Baby Boomers reaching retirement, meaning that this relatively wealthy demographic has more free time on their hands, has seen expenditures on categories such as dining out, vacations, leisure and entertainment, and alcohol outpace spending overall. This is a trend that is expected to continue over the next five years.”
Along with a renewed optimism in the economy, Americans are also focused on self-improvement for 2014. Top goals for 2014 include increased family time (88 percent), healthier diet (88 percent), exercising more (87 percent), getting household finances in order (84 percent), achieving a better work/life balance (82 percent), and taking care of personal appearance (81 percent). Perhaps not coincidentally, those who have seen their financial situations improve in the last year are more likely to report having more goals.
“An improved personal financial situation has allowed many to expand their focus from simply keeping up with the bills to looking more widely at what goals they would like to accomplish,” O’Donnell says. “Improving personal health through diet and exercise are key areas where Americans are looking to make positive changes, and with less mental energy expended on financial worries, they are in a better position to make these aspirations a reality.”