US and Global Economic Outlook:
The Consumer View
Chris G. Christopher, Jr., Ph.D.
Director, US Macro & Global Consumer
IH...
Global Consumer Market Dynamics
Global consumer market dynamics
• Global consumption growth will hang with global GDP growth.
• consumer spending growth.
...
(Percent change)
Global consumer spending growth will pick up in
2014-15
4
Sources of growth of global GDP and consumer
spending
GDP Consumer Spending
2002 2012 2022 2002 2012 2022
North America 36...
(Annual percent change)
6
Real consumer spending growth will be led by emerging
regions
(Annual percent change)
7
Consumer spending: Europe hurting, US holding
on, China & India leading
Consumer spending to GDP: World going down, China
up, many flat
8
(Percent, Domestic consumer spending share to GDP)
Consumer markets ranking
9
* Consumer spending: billions of US$; Consumption per capita: US$
2012 Consumer
spending*
Consu...
Emerging market consumers: new drivers of global
growth
• US consumer spending growth is being eclipsed by emerging market...
11
The rise of the emerging market consumer
(Percent, Domestic consumption to World GDP)
US and Europe still lead on per capita basis
Real consumption per capita, 2005 US$
12
13
Income distribution: middle-income
Mid-Income class index (2005=100, real disposable income measure)
Mid-income: 20k to...
14
Income distribution: wealthy
Wealthy class index (2005=100, real disposable income measure)
Wealthy: >80k
Chinese households will lead the world’s mid-income
class
15
(Millions, Number of mid-income households) (Millions, Number...
(Annual percent change)
Sub-Saharan Africa: Real consumer spending
16
Food for thought: Engel’s law in action
(Food spending in total consumption)
Income per capita
(Thousand of US$)
(Entertai...
Food still a large share of household budgets in
emerging markets
18
US Consumer Expenditure Share by CategoryChina Consum...
(Percent change)
US: Consumer spending will not be a strong driver of
recovery
19
-4
-2
0
2
4
6
8
1990 1993 1996 1999 2002...
2012 2013 2014 2015
Real Consumption 2.2 1.9 2.5 2.7
Real Disposable Income 2.0 0.3 3.7 3.4
Real Household Net Worth 8.0 8...
(Percent change, chained 2009 dollars)
US: Consumer spending by major category
21
-6
-4
-2
0
2
4
6
8
10
2005 2006 2007 200...
US consumer sentiment rebounding, but households
still cautious
22
0
20
40
60
80
100
120
140
160
Aug-81 Aug-85 Aug-89 Aug-...
US: Econometric analysis of consumer sentiment and
confidence
23
Consumer Sentiment Consumer Confidence
10% Increase of:
R...
(Reuters/University of Michigan Index, 1966=100)
Consumer inflation expectations, one year ahead
24
(Percent change from a year earlier)
US: Wage gains starting to surpass inflation
25
-2
-1
0
1
2
3
4
5
2001Q1 2003Q1 2005Q...
(Billions of US dollars, SAAR)
Revolving debt (mainly credit cards) anemic gains
26
800
850
900
950
1000
1050
Jul-08 Jul-0...
(Thousands of chained 2009 dollars)
US: Real consumer spending per working-age*
population
27
*population above 16 years o...
American’s Time Spent Shopping
28
Source: Bureau of Labor Statistics: American Time Use Survey
10
15
20
25
30
35
40
45
200...
Demography & generational issues
• Population growth still increasing but slowing down.
• Urbanization growing. US: low bi...
(Compound Annual Growth Rate)
Regional population growth
30
(Urbanization Rate)
Urbanization population and rate
(Millions, Urban population)
31
(Percent, population share by age groups, EU-27)
European aging population dynamics
32
Source: Eurostat
(Percent, population share by age groups, Germany)
Germany’s shrinking population
33
Source: Eurostat
(Proportion of total population)
US aging population poses a challenge to
economic growth
34
0
0.2
0.4
0.6
0.8
1960 1970 1...
(Men: average age of first marriage)
Men waiting longer to marry
35
Source: Eurostat
US: Age at first marriage by gender
36
Source: US Census Bureau, CPS Table MS-2
US student loan debt expansion
37
0.3
0.4
0.6
0.7
0.9
1.0
7.7
7.9
8.0
8.2
8.3
8.5
12Q2 12Q3 12Q4 13Q1 13Q2
Mortgage (Right...
Food still a large share of household budgets in
emerging markets
38
US Consumer Expenditure Share by CategoryChina Consum...
Clicks outpacing bricks
• Younger age cohorts higher propensity to buy online.
• All age cohorts increase online spending....
Younger consumers go online
Source: Eurostat
(Percent of individuals with at least one online purchase over the year)
Poland showing growth, Italy lagging
Source: Eurostat
(Percent of individuals with at least one online purchase over the y...
E-commerce retail sales show dramatic growth
Retail Sales 2008 to 2012
Total E-commerce
UK -4.3 63.3
Germany -9.3 37.4
Fra...
E-commerce retail share of total retail sales excluding food
service (retail trade)
43
(Percent, seasonally adjusted)
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US and Global Economic Outlook: The Consumer View

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US and Global Economic Outlook: The Consumer View

  1. 1. US and Global Economic Outlook: The Consumer View Chris G. Christopher, Jr., Ph.D. Director, US Macro & Global Consumer IHS Global Insight Program Sponsor
  2. 2. Global Consumer Market Dynamics
  3. 3. Global consumer market dynamics • Global consumption growth will hang with global GDP growth. • consumer spending growth. • Emerging market consumer spending growth far outpaces US. • Eurozone (especially southern-tier) hurting. • Global and regional consumer price inflation modest ; weak global demand; high unemployment rates in US and Eurozone; weak wage gains. • Global consumer spending as percentage GDP is likely to fall.
  4. 4. (Percent change) Global consumer spending growth will pick up in 2014-15 4
  5. 5. Sources of growth of global GDP and consumer spending GDP Consumer Spending 2002 2012 2022 2002 2012 2022 North America 36.1 26.0 20.4 41.2 32.0 25.6 U.S. 31.7 21.9 16.9 36.8 27.7 21.9 Asia-Pacific 24.7 31.4 39.2 22.7 27.4 34.4 Japan 11.9 8.3 5.5 11.4 9.0 6.5 China 4.3 11.5 19.1 3.2 7.0 13.0 India 1.5 2.7 5.2 1.6 2.8 5.2 Western Europe 27.9 23.0 19.1 26.9 23.6 20.3 Emerging Europe 3.7 6.8 7.9 3.8 6.9 8.5 Latin America 3.2 6.1 6.5 3.3 6.7 7.6 Middle East & Africa 3.8 6.2 6.4 2.1 3.2 3.5 (Percent of world GDP and consumption, US dollars) 5
  6. 6. (Annual percent change) 6 Real consumer spending growth will be led by emerging regions
  7. 7. (Annual percent change) 7 Consumer spending: Europe hurting, US holding on, China & India leading
  8. 8. Consumer spending to GDP: World going down, China up, many flat 8 (Percent, Domestic consumer spending share to GDP)
  9. 9. Consumer markets ranking 9 * Consumer spending: billions of US$; Consumption per capita: US$ 2012 Consumer spending* Consumption per capita 1 United States 11,119 35,347 2 Japan 3,631 28,467 3 China 2,837 2,095 4 Germany 1,953 23,845 5 United Kingdom 1,602 25,332 6 Brazil 1,512 7,623 7 France 1,503 23,639 8 Italy 1,217 19,959 9 India 1,124 893 10 Canada 990 28,415 2022 Consumer spending* Consumption per capita 1 United States 16,376 48,234 2 China 10,180 7,311 3 Japan 4,911 39,741 4 India 3,918 2,766 5 Germany 3,055 37,029 6 Brazil 2,950 13,855 7 United Kingdom 2,850 41,850 8 France 2,451 36,823 9 Russia 2,034 14,498 10 Italy 1,885 30,789
  10. 10. Emerging market consumers: new drivers of global growth • US consumer spending growth is being eclipsed by emerging markets. Pay check cycle more relevant, middle tier losing ground, median household income falling. • Western European consumer hurting, and BRIC consumer gaining ground. • US and Western Europe retail is a battle for market share. • Global GDP growth is depending more on emerging market consumers. • Emerging market consumers are viewed as “low-hanging fruit.” • Recently, emerging market consumers getting “first dibs.”
  11. 11. 11 The rise of the emerging market consumer (Percent, Domestic consumption to World GDP)
  12. 12. US and Europe still lead on per capita basis Real consumption per capita, 2005 US$ 12
  13. 13. 13 Income distribution: middle-income Mid-Income class index (2005=100, real disposable income measure) Mid-income: 20k to 80k
  14. 14. 14 Income distribution: wealthy Wealthy class index (2005=100, real disposable income measure) Wealthy: >80k
  15. 15. Chinese households will lead the world’s mid-income class 15 (Millions, Number of mid-income households) (Millions, Number of wealthy households) Mid-income: 20-80K real PPP$ Wealthy: 80K+ real PPP$
  16. 16. (Annual percent change) Sub-Saharan Africa: Real consumer spending 16
  17. 17. Food for thought: Engel’s law in action (Food spending in total consumption) Income per capita (Thousand of US$) (Entertainment spending in total consumption) Income per capita (Thousand of US$) 2010 data for 25 countries: Austria Azerbaijan Belgium Brazil Canada China Germany Denmark Spain Finland France United Kingdom Ireland Italy Japan Netherlands Portugal Russia Sweden Turkmenistan United States Uzbekistan Venezuela South Africa
  18. 18. Food still a large share of household budgets in emerging markets 18 US Consumer Expenditure Share by CategoryChina Consumer Expenditure Share by Category US Consumer Markets
  19. 19. (Percent change) US: Consumer spending will not be a strong driver of recovery 19 -4 -2 0 2 4 6 8 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 US Real GDP Real Consumer Spending
  20. 20. 2012 2013 2014 2015 Real Consumption 2.2 1.9 2.5 2.7 Real Disposable Income 2.0 0.3 3.7 3.4 Real Household Net Worth 8.0 8.8 3.4 1.3 Payroll Employment 1.7 1.6 1.6 1.8 Real Wage Rate 0.0 0.8 0.8 0.7 Consumption Price Deflator 1.8 1.2 1.4 1.5 Light-Vehicle Sales (Millions) 14.4 15.5 15.9 16.3 Home Sales* (Millions) 4.50 5.01 5.61 6.1 (Percent change unless noted) * Single-family new and existing homes US: Consumer markets environment 20
  21. 21. (Percent change, chained 2009 dollars) US: Consumer spending by major category 21 -6 -4 -2 0 2 4 6 8 10 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Durable Goods Nondurable Goods Services
  22. 22. US consumer sentiment rebounding, but households still cautious 22 0 20 40 60 80 100 120 140 160 Aug-81 Aug-85 Aug-89 Aug-93 Aug-97 Aug-01 Aug-05 Aug-09 Aug-13 Reuters/University of Michigan Index, 1966=100 Conference Board Consumer Confidence Index, 1985=100
  23. 23. US: Econometric analysis of consumer sentiment and confidence 23 Consumer Sentiment Consumer Confidence 10% Increase of: Relative Gas Price -1.51 -1.40 S&P 500 Monthly Growth 3.19 6.99 Initial Claims per Capita -2.05 -2.93 Unemployment Rate -1.18 Gasoline Price Trigger -1.40 -3.74 DJIA Trigger 0.78 2.48 2001 Recession 0.00 3.01 Great Recession Effect -3.16 -6.20 (Percent change) Article: Christopher, Chris (2011, July 1). An Econometric Analysis of Consumer Sentiment and Confidence Indexes: Pulling Trigger Effects .
  24. 24. (Reuters/University of Michigan Index, 1966=100) Consumer inflation expectations, one year ahead 24
  25. 25. (Percent change from a year earlier) US: Wage gains starting to surpass inflation 25 -2 -1 0 1 2 3 4 5 2001Q1 2003Q1 2005Q1 2007Q1 2009Q1 2011Q1 2013Q1 2015Q1 Employment Cost Index (private sector, wages and salaries) Consumer Price Deflator
  26. 26. (Billions of US dollars, SAAR) Revolving debt (mainly credit cards) anemic gains 26 800 850 900 950 1000 1050 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13
  27. 27. (Thousands of chained 2009 dollars) US: Real consumer spending per working-age* population 27 *population above 16 years old 40 41 42 43 44 45 2006 2007 2009 2010 2012 2013 2015
  28. 28. American’s Time Spent Shopping 28 Source: Bureau of Labor Statistics: American Time Use Survey 10 15 20 25 30 35 40 45 2006 2007 2008 2009 2010 2011 Total Men Women Time Spent Shopping during Weekdays Average Minutes per Day 10 15 20 25 30 35 40 45 2006 2007 2008 2009 2010 2011 Total Men Women Time Spent Shopping during Weekends & Holidays Average Minutes per Day The Demographic Effect
  29. 29. Demography & generational issues • Population growth still increasing but slowing down. • Urbanization growing. US: low birth rates, population growth rates slow. • Asian population challenge (Japan, China). • India’s population should exceed China’s in late 2020s. • Sr. Population increases in many countries. • Considerable generational differences in US & Europe.
  30. 30. (Compound Annual Growth Rate) Regional population growth 30
  31. 31. (Urbanization Rate) Urbanization population and rate (Millions, Urban population) 31
  32. 32. (Percent, population share by age groups, EU-27) European aging population dynamics 32 Source: Eurostat
  33. 33. (Percent, population share by age groups, Germany) Germany’s shrinking population 33 Source: Eurostat
  34. 34. (Proportion of total population) US aging population poses a challenge to economic growth 34 0 0.2 0.4 0.6 0.8 1960 1970 1980 1990 2000 2010 2020 Under 5 5 to 15 16 to 55 55 to 64 Over 65
  35. 35. (Men: average age of first marriage) Men waiting longer to marry 35 Source: Eurostat
  36. 36. US: Age at first marriage by gender 36 Source: US Census Bureau, CPS Table MS-2
  37. 37. US student loan debt expansion 37 0.3 0.4 0.6 0.7 0.9 1.0 7.7 7.9 8.0 8.2 8.3 8.5 12Q2 12Q3 12Q4 13Q1 13Q2 Mortgage (Right) HE Revolving (Left) Auto Loan (Left) Credit Card (Left) Student Loan (Left) Other (Left) Composition of household debt balance (Trillions of dollars)
  38. 38. Food still a large share of household budgets in emerging markets 38 US Consumer Expenditure Share by CategoryChina Consumer Expenditure Share by Category E-commerce Retail Outlook: US & Europe
  39. 39. Clicks outpacing bricks • Younger age cohorts higher propensity to buy online. • All age cohorts increase online spending. • Europe: Northern tier countries ahead of Southern tier. • Clicks are outpacing bricks across the board. • US e-commerce retail sales 2013-Q2 standing at 5.8% retail trade.
  40. 40. Younger consumers go online Source: Eurostat (Percent of individuals with at least one online purchase over the year)
  41. 41. Poland showing growth, Italy lagging Source: Eurostat (Percent of individuals with at least one online purchase over the year)
  42. 42. E-commerce retail sales show dramatic growth Retail Sales 2008 to 2012 Total E-commerce UK -4.3 63.3 Germany -9.3 37.4 France -5.2 125.4 Sweden 6.4 54.9 Netherlands -15.8 55.6 (Nominal sales in local currency, percent change) 42
  43. 43. E-commerce retail share of total retail sales excluding food service (retail trade) 43 (Percent, seasonally adjusted)

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