Since the November election, we have seen American companies struggle to adapt to a new and unpredictable political landscape. As corporations made the public aware of their support or opposition of President Donald Trump and his policies, whether by design or by accident, it became clear that they would face consequences either way. The public exit of the President’s Jobs Council after the events in Charlottesville was an acceleration of what had already started when it comes to how companies (and their CEOs) have been dealing with the new administration.
Even before Charlottesville, companies and organizations like Uber, Under Armour, Starbucks, and the ACLU had received press for their statements or positions on Trump’s policies, often to great accolades or scorn. For some, the free publicity garnered was a win no matter what; however, the scrutiny and pressure has proven to be difficult for many to navigate. We are in a new era now, and the President has made the decision much easier for business leaders to make; however, as is often the case, the public was already changing their patterns before companies were adjusting theirs.
Anger and vitriol – or, conversely, accolades and praise – on social media is one thing, but we wondered: how much of an impact is this new landscape having on consumer behavior? And, if it is having a significant effect on consumer behavior, how long will this impact last?
Back in March, we decided to look at how the new political landscape was impacting consumer behavior, and the results were pretty astonishing. One of the biggest takeaways from our initial study was a confirmation that partisan views have practically created two separate realities based solely on which party inhabits the White House. We weren’t necessarily surprised that Hillary Clinton voters showed little faith in the new President just two months after taking the oath of office or that, back in October before the election, Trump’s supporters saw their own status and the economy as lagging. However, it was a bit of a surprise that Trump’s supporters not only have high expectations for his presidency, but they also view their own personal economic situation in a completely different light than they did prior to the election.
The election did not just change how people view their own personal economy, however. Indeed, changes in consumer behavior continue to dramatically shift. In March, 19% of Americans reported that they had changed their spending habits since the November 2016 election. In our June survey, that number has jumped 8 points; five months after our 45th President took office, more than one quarter of Americans have changed their consumer behavior. To paraphrase former Vice President Joe Biden: this is kind of a big deal.
Five months ago, we found that these changes in behavior resulted in a new group of consumers we named the Pocketbook Activists. These are Americans who are consciously shifting their spending habits based on the public stance companies have made in regard to the Trump Administration. As we discussed in our previous report, this is not just people on the left end of the ideological spectrum taking a stand against the policies of the President. While these people are certainly a part of it, we also see people from the ideological center and far right shifting their behavior.
In March, this cohort represented $1.6 trillion in spending power. In June, the number of Pocketbook Activists jumped 5 points and added $600 billion to the spending power level. As we said earlier this year, even if these consumers shift a few percent of their spending habits, companies are going to notice.
These are interesting times to say the least, and companies are in unchartered territory when it comes to how their political views can change their bottom line. We would be surprised if this growth trend of Pocketbook Activists changes anytime soon, and that means more headaches for CEOs across the country. It will be interesting to see which companies weather the storm, and which are able to adjust in a proactive and effective manner.
To this end, the rest of this report focuses on our latest data, as well as how the numbers have moved from March to June. In October, we will have the third set of economic numbers, and we are very interested to see how the events in August will affect the data.
OVERALL SHIFTS IN CONSUMER BEHAVIOR
When it comes to those who have altered their consumer behavior (in March, our survey found that about 1 in 5 Americans changed their spending habits since the November election), we were surprised at some of the differences and commonalities of this group. This substantial number of Americans (19% of all adults) didn’t differ by income level, as households making over and under $100,000 showed almost identical responses, and there was also minimal difference by gender, although women were slightly more likely to have altered their habits (20%) than men (18%). We found some separation by gender for those under 45 years old, as a quarter of women in this age bracket changed their spending, compared to 18% of men under 45. There were also very small differences among those that identify as liberal or conservative, just about 23% of each group. While the difference was not far from the norm, Clinton voters, women under 45, Democrats, and liberals were some of the groups that were most likely to have changed their consumer spending habits.
Fast forward to June, and the number of Americans changing their economic behavior shows no signs of slowing down. In fact, it grew by 42% in just under three months. In our most recent survey, 27% of Americans – slightly more than 1 in 4 Americans – say they have changed their spending habits since November. Younger Americans have seen a significant increase, with those under 55 who have changed their spending habits go from 21% to 31%. This 10-point jump was an eye-opening difference to begin with, but when we looked at the split by gender, we were shocked at what the data was showing. Currently, more men than women under the age of 45 now say they’ve changed how they spend their money, the opposite of what we saw three months prior. Men in this age group jumped 16 points, from just 18% in March to 34% in June. The number of women in this age cohort who said they’ve changed their habits increased 6 points from March, moving from 25% to 31%.
As you can see in the chart below, there is an obvious trend happening here. Every group is experiencing an increase, and we are seeing strong shifts in a similar direction: those who identify their ideology as liberal, Clinton voters, men and women under the age of 45, and Democrats are driving this change in consumer behavior. Republicans, women as a general group, and those who identify as ideologically conservative are also seeing shifts in behavior -but they did not increase by as much. Those who are below average include men, Trump voters, Independents, those ages 65 and older, and non-voters. Nevertheless, even these groups are showing a higher propensity for this consumer behavior than before.
That being said, when we look at ethnicity, there is a clearer pattern. Groups with higher rates of changing consumer behavior than the average were Hispanic women, Asian Americans, Black men, and minority women broadly. Spending changes are being driven by immigrants, minorities, and younger people; and while conservatives rank higher than the average, liberals are reporting these changes in much higher numbers.
THE POCKETBOOK ACTIVISTS
In March, we looked at this group of economic changers and found two groups that we view as having the potential to change economic patterns in a real and meaningful way: Pocketbook Activists and New Reality Donors. For the remainder of this piece we will focus on the former group. As a quick reminder, Pocketbook Activists are Americans who are either moving their purchasing power from one company to another, or are shifting money that would have gone to one company to donating it to a non-profit instead. Overall, the concentration of these actions has remained relatively steady. About half (47%) of those who report changing their economic behavior moved spending between companies, which is similar to March, when exactly half (50%) said the same. In June, nearly two in five (38%) say they have moved spending from a company to a non-profit, a 2-point increase from March.
Back in March, we examined certain demographic groups that had particularly high concentrations of Americans shifting their spending habits. Interestingly enough, while the overall numbers showed little change, the view is very different under the surface. In fact, there were more than a few groups whose reported behavior declined significantly since March – particularly among Republican women, conservative women, white Americans, and those with annual incomes over $100,000. While we do not know exactly why this is the case, our guess is that this could be because the months between March and June were a little less tumultuous for companies than the period from November 2016 to March of this year, when Uber was dealing with publicity over profiting off an airport travel ban protest, Nordstrom was dropping Ivanka Trump’s clothing line, and Under Armour’s CEO made public comments praising President Trump. That being said, we have a hunch that these groups will jump right back up in our September survey based on the President’s dealing with (or not dealing with) the issues in and around the Charlottesville White Supremacists rally.
Looking at the June data, you will notice that not every group saw a decrease – the number of black Americans who have changed their spending habits and switched spending money between companies nearly doubled, increasing from 32% to 60%. Seeing these results, we went back to the data and discovered that new trends have formed in the last three months.
When it comes to shifting spending from one company to another, we see that numbers generally haven’t moved much between March and June. However, as you can see in the charts below, two groups have seen significant growth: black Americans (especially black men, who increased from 27% to 69%), people who didn’t vote in the 2016 election, men under 45 and older than 65, and Independents. Hispanic women have also seen a moderate increase, with nearly half (49%) saying they have shifted spending from one company to another.
There are also a few groups who have seen drastic drops in this behavior during the same time period. Conservative women fell from 70% to 47%, while Trump voters saw an even larger decrease from 72% to 45%. White women and women in general have also seen a drop since March.
These changes, coupled with the increase in the overall number of Americans shifting their behavior, resulted in the concentration of Pocketbook Activists to jump from 12% to 17%. In terms of spending power, this translates roughly to a jump from about $1.6 trillion in total annual spending to more than $2.2 trillion, according to figures from the Bureau of Labor Statistics. As we mentioned earlier, even if Pocketbook Activists are shifting just a few percent of their overall spending, this means hundreds of billions of dollars will be moving around. This is an amount of money that every CEO should be paying attention to.
So, what do the Pocketbook Activists look like as a group? They tend to be young, with 7 in 10 (71%) under the age of 55. They’re also less likely to be in the 1%, with 8 in 10 (79%) making less than $100,000 annually, and they skew slightly more female (52%). They’re also more diverse than America’s population overall; nearly half of the Pocketbook Activists (45%) aren’t white.
With all this being said, being a Pocketbook Activist isn’t a one-way street; there are basically two different directions these consumer behavioral changes can take. You can either a) move your money away from a company that doesn’t align with your values, or b) move your money toward a company because it does align with your values. Just as we did in March, we asked all of respondents which they were more likely to do.
Americans overall continue to lean toward the positive, in terms of supporting companies that align with their values – more than one-third (35%) say this, compared to a similar number in March (32%). Pocketbook Activists are certainly more polarized than the average American; while they are more likely to take positive action (40% vs. 35%), they’re also more likely to take negative action as well (28% vs. 18% overall). Additionally, there is a stark gender difference among the Pocketbook Activists. Women who are Pocketbook Activists are the most likely out of any of the groups above to take positive action (43%) and just slightly more likely than the average to take negative action (20%). However, men who are Pocketbook Activists are the least likely out of all these groups to take positive action (32%) and the mostly likely to take negative action, with nearly two in five (38%) saying they are more likely to move money away from a company because it doesn’t align with their values. These men are the only subset of Pocketbook Activists to be categorically lower than the average American in terms of positive action.
When it comes to other demographic splits, there are minor differences among various income levels; those who either make less than $100,000 or more than $100,000 annually are just as likely to take positive action as the other, and those making less than $100,000 are slightly more likely to take negative action (29% vs. 24%). However, Pocketbook Activists who make more than $100,000 a year are the most likely out of all these groups to take both positive and negative action equally.
There is also a stronger movement towards taking positive action since March; for example, just one quarter of Pocketbook Activists, men who are Pocketbook Activists, and Pocketbook Activists making less than $100,000 a year (25% each) were more likely to take positive action.
The Pocketbook Activists are clearly a force to be reckoned with; with $2.2 trillion in total spending power, they are bound to make an impact – they most likely already are – and will surely be paying attention as more companies are either forced into or are choosing to be in the political spotlight. With a political climate unlike what we’ve experienced before, these situations are bound to continue to happen with more frequency than ever.
While it will take some time to fully understand the effects of these behaviors and how meaningful they are to corporate bottom lines, we are now starting to see definitive trends with who is spending their money where and with what mindset they’re deciding how to spend. Americans are clearly paying attention to the words and actions of visible CEOs and making decisions based on what they hear on the news and through social media. As we said in March, CEOs and corporate boards will need to think about how they are dealing with this new reality.