Gaming & Lodging: Ambling with Grambling #32: Consumer Equities for an Elderly Economy

Research evidence excerpt

Gaming & Lodging: Ambling with Grambling #32: Consumer Equities for an Elderly Economy

ise (higher end brands, yields). Most of these

sub-sectors skew toward older consumers, resulting in investor inbounds asking

about drivers of the improvement (one-time vs. durable) and about key stocks with

exposure. We see both structural and cyclical components of the trend-line.

Household net worth/wealth for older consumers (55+) have increased substantially

since the mid 2000's from ~55% to ~75% while the younger cohort (<40) has been

cut in half from ~12% to ~6% currently. This increase in wealth should translate to

stronger spending power for a prolonged period of time, but it is also concentrated

among the highest end consumers. Furthermore, older consumers typically curtail

spending as they age. On the flip side, favorable tax benefits from OBBA this year

(reinstating state and local tax deductions and enhanced senior deductions… see

Impacts of OBBA on Consumer Spending & Cohorts) may be a one time bump and

could see eroding benefits as inflation takes a bigger bite on this consumer,

particularly those not in the high end (see Affordability Under the Surface). This may

be in part why our AlphaWise Consumer Survey has seen weaker responses on

financial outlook relative to younger consumers though they too will face

incremental headwinds.

To help parse out how the market has responded to these trends, we created a

market cap-weighted group of consumer companies skewed to older consumers and

another group skewed to younger consumers. The older consumer group includes

JILL, OXM, LZB, SCI, CSV, KMB, MO, BC, LE, CBRL, VIK, TNL, HGV, VAC, HOG, THO,

PENN, DLTR. The younger group includes DKNG, ABNB, FIVE, RVLV, URBN, ELF,

CELH, BROS, ANF, AEO, UMZ, TLYS, CROX, VSXY.