"There are more than 57 million individuals in the 8-21 age group, and their influence on the consumer economy is immense," says John Geraci, vice president of youth research at Harris Interactive, which recently conducted a nationwide survey of the Generation Y population's income, spending, and savings habits.
American kids, teenagers, and young adults, aged 8 to 21 years, have annual incomes totaling $211 billion, according to latest projections based on results of a nationwide survey of the Generation Y population. Results show that this group is spending at a rate of approximately $172 billion per year and is saving at a rate of $39 billion per year.
"Generation Y's needs and opinions drive many adult purchase decisions, and they, literally, represent the future market for most consumer brands," Geraci says.
The economic downturn and recovery has been felt in the youth market. The annual incomes among 8 to 21 year olds is down from Harris Interactive's projection of $231billion in 2002, although spending is up from a projection of $155 billion in 2002.
The spending power of young consumers grows substantially with age and is concentrated in the upper end of the Generation Y age range:
- Pre-teens (ages 8-12) spend at a rate of $19.1 billion annually, or $946 per capita;
- Teens (ages 13-19) spend at a rate of $94.7 billion annually, or $3,309 per capita;
- Young adults (ages 20-21) spend at a rate of $61.3 billion annually, or $7,389 per capita.
The study results indicate that youth income is down over the past year, but spending is up. "This shows that this age group has been willing to forgo savings in order to keep their spending levels consistent," said Geraci. "It is a very optimistic generation, and they demonstrate a great deal of confidence that the economic rebound is around the corner and that good times are ahead for them."
The study showed that the sources of income for young people evolve as they age. A majority (87%) of income for children under age 13 years is parent-supplied - either through allowances, asking parents for money, or through money earned from special chores or household work. In contrast, 37% of teens' income and 7% of young adults' income is parent-supplied. Not surprisingly, teens and young adults rely predominantly on paid jobs for their income.
Fifteen percent (15%) of youth spending is done online, and this percentage was consistent across the 8-21 age range and with projections for 2002. However, boys remain more comfortable with ecommerce, as they spend 1.7 times as much as girls do online.
"We also found that during the course of a year, Generation Y puts 62% of their income into savings at some point, but only 19% of their total income ends up in savings in the long term," Geraci added. "On average, young people carry less than $30 with them, so they need to constantly connect to their income source or savings to buy things."
The online study of 3,432 young respondents was conducted in June 2003.
Posted on aef.com: September 9, 2003
Masha Geller, Media Post. September 4, 2003
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