Photographer: Craig Warga/Bloomberg
What Seven Social Trends Told Us About the U.S. Economy in 2017By
Trips to New Zealand and Unicorn Frappucinos offer insights
Consumers felt #happy and spent more freely in strong economy
When most Americans look back on 2017, they might fondly recall eclipse goggles or learning that Justin Bieber can, sometimes, sing in Spanish. Here on the Bloomberg economics team, we’ll probably remember Federal Reserve Chair Janet Yellen’s last stand, persistent job gains and the much-talked-about death of the Phillips Curve.
We’re trying to reach a happy medium with this list, running down what a few of the top social trends of 2017 said about the year in economics -- and what they mean for 2018.
1. Kombucha and Unicorn Frappuccinos
Hipsters and yogis doubled down on $4 bottles of fermented tea this year and Starbucks fans indulged in limited-time-only Unicorn Frappuccinos, which company leadership declared an “Instagrammable success." That one ran consumers around $5 for a grande, depending on the market.
You might wonder what this has to do with the economy. Remember that guy who said millennials are spending their money on avocado toast at the expense of wealth-building, giving rise to abundant memes and this baffled Reddit thread? Same idea. People are splurging on small luxuries. On one hand, this is positive: a strong economy is propping up demand and encouraging outlays. On the other, it could be worrying if consumers don’t move on to bigger investments, like houses. This was a source of some angst this year. Which is a nice segue to our next trend...
2. Mansions vs. Mom’s Basement
This was the year millennials started tiptoeing toward home-buying. Ownership rates for those 35 years old and under ticked up to 35.6 percent in the third quarter from 34.3 percent in the first.
Still, older millennials are reluctant to move out of their parents’ basements, Trulia.com economist Ralph McLaughlin found in an analysis. Entry-level buyers will be working against two big headwinds as we enter 2018: cheaper housing inventory is limited, and median home-price gains have been outpacing overall inflation. Unless people can swing a move from Mom’s house to a mansion, that could be a problem.
3. Ping-pong at work
Higher wages could help out here, but companies did their best to avoid increasing pay this year. The labor market tightened markedly in 2017 and unfilled job openings traced new records. Pay was slow to respond. Employers might have been offering non-wage benefits and perks -- think wellness programs and sweeteners that “enhance and modernize” office culture -- in lieu of raises, the Federal Reserve’s Beige Book of anecdotal reports suggests. A key question for 2018 is whether they’ll have to put up actual cash money.
4. Online shopping for everything
America crossed a cyber threshold this year. About 20 percent of the core retail is now transacted online, based on an analysis by Gennadiy Goldberg at TD Securities. That could be a driver behind another key 2017 mystery: tepid inflation. It’s easy to compare prices across online marketplaces and opt for the cheapest, which might restrain companies’ pricing power. Fed officials are skeptical about how much the “Amazon effect” is curbing inflation, but it’s a debate that’s sure to persist.
5. Fitness selfies
Despite their online deal-hunting, Americans aren’t skimping. What they aren’t spending on books or paper towel they’re pouring into gym memberships.
Enthusiasm for discretionary services spending isn’t isolated to barbells and stadium cycling. It finally exceeded its pre-recession peak in the second quarter, the New York Fed found, and the savings rate has ticked down to the lowest rate since the start of the recession. Solid demand is benefiting categories from financial help to healthcare.
6. Havana, Reykjavik and Auckland
Another sign that a strong economy is translating into lower bank account balances? People are going on vacation. U.S. residents recorded a record 80.2 million outbound trips last year, new data shows, up 8 percent from 2015. There’s reason to believe travel remained hot in 2017: travel import spending (the amount of money Americans spent on goods and services overseas) ticked up 9.6 percent between January and October, compared to the prior year.
As the tourism market heated up, travel site Kayak’s top trending destinations included Havana, Reykjavik and Auckland.
It made Instagram’s Top 10 hashtags this year, and American optimism isn’t reserved for social media. In one of the clearest signs that economic growth is being widely felt, consumer confidence climbed steadily in 2017, finally eclipsing pre-recession levels. It didn’t hurt that stock markets hit record highs throughout the year, leaving equity investors feeling #blessed.