Here’s something that may or may not surprise you. Women are responsible for and control 80 percent of consumer purchases. I’m sure that won’t surprise too many of the men out there, but this factoid from The Trendsight Group did catch my attention.
So females are the big spenders and have huge influence over the economy. If we control 80 percent of consumer purchases and 70 percent of the Gross Domestic Product (GDP) is made up of consumer purchases then our choices have a great deal of weight.
Let’s think about this; GDP, which is Gross Domestic Product, measures spending on common things like clothing, food, and other goods and services like dentist, doctors, dry cleaning, as well as large ticket items such as cars and appliances. Seventy percent of GDP is made up by those types of expenditures. Roughly 14 percent of GDP is derived from purchases of business machinery and the building of new factories, while the remainder is attributed to government spending on things such as defense or capital structure projects.
So how have your consumption habits changed in the past two years while the economy has “shifted?” Since our confidence levels influence our spending patterns, confidence or lack there of influences economic activity in a big way.
At the moment, many consumers are spending less and saving more. That’s good news, but in the short-term this could slow down GDP, but in the long run it may be very beneficial. Spending may shift to areas that will increase productivity in the future. Is any of this starting to sound like those talks we have with kids and spouses about delaying short-term gratification for longterm sensibility?
We don’t need to necessarily decrease spending, just focus on how we’re spending as individuals and as a country. Saving is in a way “spending” because you are allocating resources for the future. The trick is getting the right mix at any given time between consumption goods, business goods, government expenditures and savings.
In the next decade women will control two-thirds of all consumer wealth in the United States. Our influence and impact on the future is noteworthy. As women baby boomers retire the federal budget will be impacted. For the economy as a whole it will be a good thing though. Once boomers retire they certainly continue to buy goods and services (think GDP) but won’t be competing for jobs. With fewer individuals competing for jobs, the inference is that wages will tend to go up with lower unemployment. This in turn could increase payroll taxes which could add to government income.
These subtle nuances and trends are what make demographics and economics so fascinating. Adaptation to our ever changing environment keeps it interesting. I’m sure you can easily come up with several examples of how things have dramatically changed in your life over the years. Technology is the most glaring example of this; touchtone phones used to be a luxury, and now one is considered Neanderthal if they don’t have a cell phone.
Computers used to take up entire rooms in corporate headquarters; now they are laptops and handheld. The Internet has become our major news source and as a society we adapt to these changes. We can evolve, adapt and reinvent ourselves in response to the outside world while maintaining core principals.
For these reasons and many more, economics is a dynamic field of study. In simpler terms, there are a lot of moving pieces and parts; some we can control and predict while others are completely out of our control. Attitudes and behaviors are two things we can control and these have a positive influence on those around us as well as on our economy. Making prudent choices requires forethought and planning, but the results are worthwhile.
It’s common to feel overwhelmed and avoid financial issues but this only compounds the fear. Rather than avoid, start to build or rebuild your comfort level and the relationship you have with your finances. Choices and education are fundamental basics for defining and obtaining your financial planning goals.
Darcie Guerin, Financial Advisor & Branch Manager, Raymond James & Associates, Inc. located at 606 Bald Eagle Drive, Suite 401, Marco Island, and FL 34145 provides this article. If you have questions please contact Darcie Guerin via e-mail at Darcie.Guerin@RaymondJames.com. Phone (239) 389-1041, toll free (866)-343-0882 or at RaymondJames.com/Darcie. Past performance may not be indicative of future results.