Lets shape an economy that values connection over consumption
[Music]
[Applause]
what happens to an economy
when its people retire and begin to
consume less
it’s a silly question if the economy is
tied to
banking like in luxembourg or oil like
the united arab emirates
but here in the united states of america
more than two-thirds of our economy is
tied
to how much people consume
like wallpaper ripped off an old
plastered wall
the covid pandemic revealed what it
really looks like when people stopped
consuming
how do we know well all economies
measure their value or their worth by
totaling up the cost of everything
produced or consumed within their
borders
this is what we call gdp or gross
domestic
product and our gdp declined by 32
in the months that surrounded the
pandemic induced economic shutdown
it even tipped us into a recession all
because
people began to consume a little bit
less
but the shutdown revealed a hidden crack
behind that wallpaper
a glimpse into yet another consumption
crisis
right around the corner the graying of
the u.s
economy you know what we’re talking
about here right like some people call
this the silver tsunami
others call this the gray wave or the
silver wave
we prefer our term grey economy because
well it has the word economy in it
but we are all talking about the same
thing
the aging of the us consumer into
retirement
my name is neely taminga and if economic
data were nutrition
i’d be a nutritionist the company i
co-founded
distill advises ceos and boards about
consumer behavior
all through an economic lens i have been
researching
and writing about consumerism for more
than half my life
and as nerdy as i can get into the
details and data
i have found that personal experiences
truly do spark the best insights
so when i was a little girl around the
age of 12
i used to love to hop on my bike and
ride into the center of the town i grew
up in called webster groves missouri
there in the center of town stood this
ben franklin
five and dime store known for its
endless aisles of candy
before it hop on my bike i’d be at home
scraping together this like sweaty wad
of coins and cash amounting to five
dollars before stuffing them in my
on those trips my economic reality was
five dollars and my life’s priority was
to purchase
all the swedish fish my money would
allow me to buy which was a lot back
then
because when i was a kid it was one
penny per fish
kids are not getting as much these days
for their five dollars i’ve calculated
it because i
am nerdy like that they’re paying 1.3
cents per fish
the point of the story is this all
consumer purchases
yours and mine begin with an economic
reality
and a life stage priority let’s consider
together how these
realities and priorities shift as we age
at 12 it’s five dollars in candy at
22 it’s a little more than five dollars
and candy becomes beer at 32
it’s a lot more than five dollars and
candy becomes a really cool car
at 42 you’re making some good money
but candy starts to become whatever your
mate
wants to remodel in that home you just
bought in the burbs
and at 52 you’re making some of the best
money of your career
but you also have some of your biggest
bills as you
seek to put kids through college
possibly pay for big weddings
it’s also an age where you begin to look
out onto the horizon
and contemplate your retirement as you
watch your parents
live out theirs and at 62 you find
yourself at that doorstep of retirement
and there’s a single but significant
calculation that greets you
in the form of a question before you
decide to step through that threshold
at which age do you begin to take social
security benefits
now at a lower amount or later at a
higher amount
whatever you decide that amount
basically remains fixed for your
remaining years on this blue earth
as a child or as an adult
all consumer purchases begin with an
economic
we can only spend what we think we have
in our pockets or what we think we’re
going to have in our future
when we’re early in our adult years we
tend to think of our income potential
as one with an infinite horizon which
just feels boundless optimism and
sometimes boundless consumption as we
seek to keep up with the joneses
but as we near those retirement years
that horizon becomes a little bit more
finite
and pragmatism sets in as it turns out
there’s math that supports the shift in
mindset
in research findings by our firm we
uncovered a chilling statistical
relationship between social security
benefits
and retail sales now retail sales is
this commonly monitored measurement of
our economy
it’s part of the consumption component
of that gdp we talked about earlier
we found that as social security
benefits begin to
accelerate like a foot on a gas pedal
going faster and faster
retail sales begin to decelerate about a
year later
like another foot pumping on the brakes
as consumers age into this economic
reality of retirement
they begin to spend less in the economy
think of it this way if you’re 52 and
you’re still working
you don’t even think twice about picking
up the tab to a really big family dinner
at a really nice restaurant
but if you’re 72 and you’re no longer
working
you might have to think twice about
picking up that tab because your budget
your income
it’s fixed see
as consumers age into this new reality
and their mindset shifts from optimism
to pragmatism
retail sales consumption our economy
are all connected and affected retail
sales
consumption our economy are all
connected and affected the pandemic
induced economic shutdown
proved that to be an undeniable truth
yet here we are with another consumption
crisis right around the corner
the precipice of great economy with the
aging of the us consumer into the
retirement years
each year we see a steady growth in the
number of people aging into the
retirement years
we’re here in the year 2020 and 20 years
ago
we had 40 million people aged 62 and
older
10 years ago that 40 million grew to 47
million
do you know how many people are aged 62
and older this year
66 million people
66 million people that’s a 65
increase from 20 years ago 66
million people that’s the entire size of
the population in the united kingdom
look around you one in five people
are either in or very near retirement
and this
is growing there are more people turning
62 in the next two years here in the
united states than history has ever seen
before
the baby boomers are aging into
retirement
which means the baby boomers are aging
into a new economic reality
a simple but seismic truth retirees
report lower income
and they spend less money our research
found that when we compared folks
age 65 and older to those that are age
55 to 64 reported income was 18
lower and not surprisingly spending was
23
less it makes sense work less
have less spend less okay
so more people are aging into a new
economic reality called retirement
with a fixed and lower income and
therefore they’re consuming less and
spending less
big deal big deal the health
of the us economy is built on people
buying things
and spending money on services from
homes to health care food to gas
clothes to phones travel to baseball
games goods and services
our nation’s identity is shaped by how
much people consume
so what happens
to a consumer driven economy
when so many more of its people begin to
retire
and consume less can the economy grow
while consumers gray
we don’t know the precise answers to
these questions this is a
very new chapter in u.s economic history
but it will repeat itself again with the
aging of the millennials so
we would be wise to contemplate our
economic future
try to get it right with the aging of
the baby boomers
what we do know is that for the past 70
years
it’s been a codependent relationship so
goes the consumer
so goes the economy
the grading of the u.s consumer
is really an economic identity crisis
revealed
we are highly dependent on consumption
we cannot reshape our economic identity
our gdp
overnight it’s not possible overnight
perhaps we need a new one like banking
is for luxembourg or oil is for the
united arab emirates
maybe we do need a new dominant driver
say like manufacturing or some
technological version of that until we
get there
we can gently guide our individual
consumption identities
to one that is mindful choosing
quality over quantity buying products
intended to last spending money where
there’s really meaning
or spending on services that we truly
need
as individuals searching for our own
identities
maybe we need to think a little bit less
about keeping up with the joneses
and more about connecting with the
joneses
caring for the joneses being kind to the
joneses
maybe if we saved or invested more
during our working years we could then
spend more in our retirement years or
even better
invest more in the generations that
follow us
flattening the curve of consumption
while building a more sustainable
economy along the way
what if we bought a little less candy
a little less beer a more pragmatic car
a slightly smaller home hosted
meaningful not
showy weddings chose gap years to go
learn a trade and earn money before
heading off to college in order to
reduce our dependence on debt while
there
small moments of individual discernment
can pay big dividends in the future
here’s what i want for us
let’s be a people that shapes an economy
not an economy that shapes a people
the consumer has proven that they’ve
been in the driver’s seat of this
economy
for the past 70 years so let’s shape it
together get in a more pragmatic car
and drive
as individuals let’s choose an economy
that evolves from placing value on its
citizens
solely by how much they consume into one
that values how
they consume mindfully
with future hindsight with the kind of
wisdom that only a 62 year old
at the doorstep of retirement can offer
thank you
thank you very much