Highlights Of The Fall 2014 Market Tracking Study

The American Affluence Research Center 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.

Highlights of the Fall 2014 Affluent Market Tracking Study provides extensive current and historic trend data, presented for key demographic segments, on the following:
• Purchase intentions for eight major expenditures including autos, primary residences and vacation homes, cruises, and major home remodeling.
• Expected changes in spending for 17 products and services including vacation travel, dining out and recreational and entertainment activities, various durables for the home, apparel, and fine jewelry and watches.
• Who has a positive outlook for the economy and their personal wealth and their spending plans.

Special topics covered in this report include:
• What the affluent plan to spend for December holiday gifts, how that compares to last year, and who will spend the most.
• How the affluent plan to prioritize the spending of discretionary income on vacation travel versus saving, buying durable goods, and/or spending for entertainment or recreational activities.
• Plans for 14 different travel activities ranging from staying in their own vacation home/condo to chartering a plane.

Two important marketing questions answered in new fall 2014 survey:
1. Which affluent and luxury consumers are spending on your products and which are still reducing/deferring expenses?
2. Which consumers plan a general effort to reduce or defer expenditures and which will continue to spend?

The new fall survey presents the above data for market segments defined by age, gender, income, and, most importantly, net worth.

Survey and Report Content
This is the 26th in the original and only continuing series of twice-yearly surveys that focus on the 12.2 million households that represent the wealthiest 10% of all U.S. households, based on net worth, as determined by The Federal Reserve Board. Since 2002 these surveys have regularly measured and tracked the 2-month outlook of the most affluent households for the economy, the stock market and their personal earnings, savings, investment objectives, and spending plans for 17 product categories and 8 major expenditures. In addition, each survey contains special questions exploring new topics.

Special questions in this survey were used to identify the amount spent on December holiday gifts in 2013 and the amount expected to be spent in 2014.

A series of questions about travel identified how the affluent prioritize the spending of discretionary time and income on travel and plans for 14 specific travel activities during the next 12 months.

These tracking studies are unique in that they are conducted by mail (similar to the Conference Board surveys for the Consumer Confidence Index) among projectable national samples drawn at random, and they focus on the future outlook and spending plans of the affluent, rather than asking the respondents to remember and reconstruct past spending that is then extrapolated.

The surveys track plans for major purchases (vacation homes, primary residences, home remodeling, automobiles, boats, and cruises) during the next 12 months. The surveys also track planned changes in spending during the next 12 months for 17 categories of products and services. These include fine jewelry and watches, domestic and international travel, dining in casual and upscale restaurants, furniture, major appliances, entertainment equipment, home computer equipment, entertainment, recreational activities, collectibles, designer and non-designer apparel, and charitable and political contributions.

Our new, expanded report format with graphs and charts will help you to identify and understand the differences between affluent consumers and the true luxury consumers. These graphic elements, plus the executive summary and highlights sections, will facilitate a quick read of a report rich with data.

The wealthiest 10% of U.S. households account for almost half of all consumer spending, and these surveys are designed to provide information critical for effective marketing to affluent and luxury consumers.

Research Methodology
Unlike other affluent and luxury market research that is based on online surveys of panels of people who are compensated for participating in regular and frequent surveys, our unique direct mail surveys are based on projectable national samples drawn at random to be representatives of the precisely defined population of affluent households, consistent with the research of the Federal Reserve Board. Confident of their anonymity, the respondents to our surveys are typically more affluent and more open in providing confidential information.

Surveys were mailed to a randomly selected, national sample of 4,500 men and women in households that, based on their income and ownership of certain assets, were expected to meet the minimum net worth requirement of $800,000. The overall survey response rate was 10.5 percent, thus showing the importance of this survey to the respondents, who have been a leading indicator of economic conditions, as when they called the recession in our March 2008 survey (well ahead of everyone else).

This report is based on the responses from 359 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $284,000, an average net worth of $3.1 million, average investable assets of $1.6 million, and an average primary residence value of $1.2 million. Over 94% have a net worth of $1M or more.

The survey respondents represent 39 states. Eighty-three (83) percent are married. The average age is 57.5 years. Forty-seven (47) percent are men and fifty-three (53) percent are women.

The maximum margin of error of this survey, at 95% confidence, is five percentage points.

Index values range from 0 to 200 and are compiled by subtracting negative feedback from positive. The value of a neutral response is 100. An index value of 100 means equal positive and negative feedback.

This survey is more informative than others for several reasons. Unlike some other surveys of the affluent, this is not an extrapolation of past spending that they have been asked to remember and reconstruct. It is designed to identify future spending plans and intentions.

Unlike most other surveys of the affluent, this survey of people does not include respondents who do not qualify to be among the wealthiest 10% of US households, based on net worth. Research by the Federal Reserve Board and the IRS shows that net worth is a more stable indicator of wealth than is income. There is more turnover among the people in the highest percentiles of income than among the people in the highest percentiles of net worth.

Unlike other types of surveys where the respondents cannot be confident of their anonymity, the respondents to our surveys are typically more affluent and more open in providing confidential information.

Major Findings
Affluent Positive in their Personal Wealth Outlook Despite Some Concern about the EconomyThe assessment of current business conditions is essentially unchanged from the Spring 2014 survey and is 5 points below the Fall 2013 index. The index for future business conditions declined 10 points from the spring survey and is 5 points below the Fall 2013 survey. The index for change in the stock market declined a substantial 21 points from the Spring 2014 index. While remaining near or slightly above neutral territory, these indexes suggest some uneasiness among the affluent about general economic conditions, which may reflect concerns about the global tensions and stock market volatility prevalent during September, when the survey was in the field, after new market highs were achieved mid-month.

The composite ACE 12-month Economic Outlook Index (which is the average of the 12- month outlook for business conditions, the stock market, and household income) declined a substantial 10 points from the Spring survey, but remains 3 points above the Fall 2013 reading and is just below positive territory (99). This index is in neutral territory while the overall Consumer Confidence Index of the Conference Board is slightly negative.

The expected change in after tax personal income rose a modest 3 points from Spring 2014 and is a strong 15 points above Fall 2013. Over a third expect their net worth to be higher in September 2015. These are positive factors for potential increases in spending.

The indexes for the change in spending for the 17 products and services tracked by these surveys are about the same as the prior two surveys in most cases. There was a decline of 10 percentage points in the affluent who expect to acquire one of the 8 major items.

A substantial amount of additional potential purchases of the 8 major items are represented by the consumers that have yet to decide about a new auto, a cruise, a remodeling project, and the acquisition of a primary or vacation home. Of the 17 product categories, only two (both vacation travel categories) are in positive territory, seven are in the neutral range, and eight are in negative territory, suggesting a decline in spending. Eleven of the 17 categories were equal to or stronger than in Spring 2014.

The 58-page/44 exhibit Fall 2014 Affluent Market Tracking Study #26 is available at a price of $495. With a full 109 page set of 65 tables of cross tabulated data, the price is $695. To order, visit http://affluenceresearch.org/subscribe-contact-us/order-reports/ and tell us which you would like to buy. Please include the purchase price, your name, and the name of your organization. AARC accepts checks and charge cards.

Buy the new Affluent Market Tracking Study #26 with a full money back guarantee. If you are not totally satisfied with the report, your money will be fully refunded with no questions asked.

American Affluence Research is currently lining up sponsors for its fall 2015 survey and has intentions to include several questions about the market for various alternatives to full ownership of a vacation home. Anyone interested in sponsoring this research should contact Ron Kurtz at kurtzgroup@comcast.net or call 770-740-2200.

Ron Kurtz is the founder of The American Affluence Research Center, which is a recognized authority on America’s most affluent consumers.

His prior experience included 20 years in executive positions in the airline, cruise, and hotel industries.

As the founding President of Sea Goddess Cruises, Ron defined the business strategies that led to its recognition as the industry’s finest cruise line. Ron was part of the initial development team and a strategic marketing consultant for 6 years to ResidenSea, operator of The World, which has condominium type apartments that sold for $2 million and up.

Ron earned his MBA degree at Harvard Business School and a BBA degree at the University of Texas. A frequent writer for trade publications and speaker at industry functions, he has specialized in and researched the affluent market since 1982.

Ron has been a featured speaker at conferences for the cruise, residential resort, fractional ownership, realtor, travel agent, investment, and luxury industries.