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Gallup Poll Confirms: Boomers’ Spending Down Sharply

Gallup recently posted some interesting findings about spending cutbacks by age (see chart below).

Surprisingly, the Boomers did not make the biggest cuts.  That distinction belongs to Generation X.  Gallup writes,

Baby boomers’ self-reported average daily spending of $64 in 2009 is down sharply from an average of $98 in 2008. But baby boomers — the largest generational group of Americans — are not alone in pulling back on their consumption, as all generations show significant declines from last year. Generation X has reported the greatest spending on average in both years, and is averaging $71 per day so far in 2009, down from $110 in 2008.

We find it interesting that, according to Gallup’s numbers, the average Gen Xer spends more per day than the average Baby Boomer.  This would seem to fly in the face of the U.S. Government Consumer Expenditure Survey data that we use in our models that suggests that spending peaks at around age 48.  Gen X is composed of people currently in their mid-30s to mid-40s…quite a few years below the peak number.  Our best guess is that this numbers include only “discretionary” purchases and do not include large items like mortgage payments, car payments, etc.  It is entirely possible that Gen X spends more on lunch and lattes, but considerably less in total spending.   For now, we will continue to use the Consumer Expenditure numbers, though we’d like to look a little deeper at Gallup’s methodology.

At any rate, Gallup does sound a bit like HS Dent in a few places:

 ”With baby boomers constituting the largest bloc of U.S. consumers, their spending habits have a proportionately greater effect on the economy, given that consumer spending accounts for about two-thirds of the total gross domestic product.”

And

“Gallup has found the presence of young children in the household to be a major predictor of reported spending (in 2008 and 2009, the difference in reported average spending between parents with children under age 18 and non-parents was about $20).”

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy