Chart of the Week

How the Modern Consumer is Different

Published

4 months ago

June 7, 2019

Jeff Desjardins

How the Modern Consumer is Different

There is a prevailing wisdom that says the stereotypical American consumer can be defined by certain characteristics.

Based on what popular culture tells us, as well as years of experiences and data, we all have an idea of what the average consumer might look for in a house, car, restaurant, or shopping center.

But as circumstances change, so do consumer tastes – and according to a recent report by Deloitte, the modern consumer is becoming increasingly distinct from those of years past. For us to truly understand how these changes will affect the marketplace and our investments, we need to rethink and update our image of the modern consumer.

A Changing Consumer Base

In their analysis, Deloitte leans heavily on big picture demographic and economic factors to help in summarizing the three major ways in which consumers are changing.

Here are three ways the new consumer is different than in years past:

1. Increasingly Diverse
In terms of ethnicity, the Baby Boomers are 75% white, while the Millennial generation is 56% white. This diversity also transfers to other areas as well, such as sexual and gender identities.

Not surprisingly, future generations are expected to be even more heterogeneous – Gen Z, for example, identifies as being 49% non-white.

2. Under Greater Financial Pressure
Today’s consumers are more educated than ever before, but it’s come at a stiff price. In fact, the cost of education has increased by 65% between 2007 and 2017, and this has translated to a record-setting $1.5 trillion in student loans on the books.

Other costs have mounted as well, leaving the bottom 80% of consumers with effectively no increase in discretionary income over the last decade. To make matters worse, if you single out just the bottom 40% of earners, they actually have less discretionary income to spend than they did back in 2007.

3. Delaying Key Life Milestones
Getting married, having children, and buying a house all have one major thing in common: they can be expensive.

The average person under 35 years old has a 34% lower net worth than they would have had in the 1990s, making it harder to tackle typical adult milestones. In fact, the average couple today is marrying eight years later than they did in 1965, while the U.S. birthrate is at its lowest point in three decades. Meanwhile, homeownership for those aged 24-32 has dropped by 9% since 2005.

A New Landscape for Business?

The modern consumer base is more diverse, but also must deal with increased financial pressures and a delayed start in achieving traditional milestones of adulthood. These demographic and economic factors ultimately have a ripple effect down to businesses and investors.

How do these big picture changes impact your business or investments?

Related Topics:consumers debt demographics generations income Millennials

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Chart of the Week

The Big Five: Largest Acquisitions by Tech Company

The ‘Big Five’ tech companies are rapidly reshaping the global tech landscape with their acquisitions, devouring any competitor who gets in their way.

Published

5 days ago

October 11, 2019

Katie Jones

The Big Five: Largest Acquisitions by Tech Company

The Big Five tech giants, or “FAAMG”—Facebook, Amazon, Apple, Microsoft, and Google (Alphabet)—have a combined market capitalization of over $4 trillion.

These powerful tech behemoths often devour the talent, technology, or entire businesses of aspiring competitors. Given their financial weight, mergers and acquisitions have become a key tactic in maintaining their strong grip on tech supremacy.

Today’s Chart of the Week explores the world’s most powerful tech companies and their biggest acquisitions to date.

Which Acquisitions Were a Success?

While these tech giants may have had big aspirations for these exceedingly large deals, they have mixed success rates.

Microsoft

Microsoft made its big move 2016 to buy LinkedIn for $26.2 billion, and it’s the most sizable acquisition by any of the Big Five tech companies.

Microsoft’s 5 Biggest Acquisitions:

Acquisition (Year)	Amount	Category
LinkedIn (2016)	$26.2 billion	Social Media
Skype (2011)	$8.5 billion	Telecommunications
GitHub (2018)	$7.5 billion	Software
Nokia (2014)	$7.2 billion	Telecommunications
aQuantive (2007)	$6.3 billion	Marketing

The LinkedIn deal was made due to the synergy between the two companies’ offerings, and Microsoft’s desire to gain access to LinkedIn’s 575 million members.

However, not all of Microsoft’s acquisitions have been as successful, such as its 2014 purchase of Nokia’s Devices & Services business for $7.2 billion. This seemed like a smart move at the time, considering the Finnish company held 41% of the global handset market.

Yet, Microsoft sold the asset for a mere $350 million just two years later. Microsoft shifted its strategy and exited the feature phone market, choosing to focus on a narrow, niche market for their hardware.

Amazon

Amazon has closed more than $20 billion in acquisitions and investments since 2017. This includes the purchase of Whole Foods, which Amazon bought for $13.7 billion, and is the company’s largest acquisition to date.

Amazon’s 5 Biggest Acquisitions:

Acquisition (Year)	Amount	Category
Whole Foods (2017)	$13.7 billion	Retail
Zappos (2009)	$1.2 billion	Retail
Ring (2018)	$1.2 billion	Technology
PillPack (2018)	$1 billion	Pharmaceuticals
Twitch (2014)	$970 million	Social Media

From purchases to bolster the AI of smart assistant Alexa, to Wi-Fi enabled doorbell Ring, recent additions clearly show the company intends to cement its presence in people’s homes.

After acquiring Whole Foods, Amazon began offering store discounts to Prime customers, in an attempt to bundle its home offerings and provide a more holistic customer experience.

Alphabet

Alphabet has made several daring moves into the hardware and data science sectors. The company’s biggest acquisition was Motorola, which it bought in 2012 for $12.5 billion.

Alphabet’s 5 Biggest Acquisitions:

Acquisition (Year)	Amount	Category
Motorola (2012)	$12.5 billion	Telecommunications
Nest (2014)	$3.2 billion	Technology
DoubleClick (2007)	$3.1 billion	Marketing
Looker (2019)	$2.6 billion	Software
YouTube (2006)	$1.7 billion	Social Media

However, the purchase of Motorola was a bet that didn’t pay off. Alphabet sold off much of Motorola’s assets for less than $3 billion in 2014, a little less than two years after it had originally acquired it.

Alphabet continues to consolidate its acquisitions in order to simplify its organizational structure. DoubleClick, acquired in 2007, merged with Google Analytics 360 Suite under the Google Marketing Platform—making it easier for marketers to access their metrics using one platform.

Apple

Out of the Big Five companies, Apple has the fewest acquisitions over $1 billion. Its largest purchase was for Beats Electronics, which it acquired for $3 billion in 2014.

Apple’s 5 Biggest Acquisitions

Acquisition (Year)	Amount	Category
Beats (2014)	$3 billion	Music
Dialog Semiconductor (2018)	$600 million	Manufacturing
Anobit (2011)	$500 million	Manufacturing
Shazam (2017)	$400 million	Music
NeXT Computer (1996)	$400 million	Technology

Apple’s increasing music streaming efforts have been evident, with the acquisition of Shazam three years after it purchased Beats Electronics.

In an intriguing recent turn of events, Apple recently announced it will acquire the majority of Intel’s smartphone modem business. This $1 billion deal will allow Apple to build all of its devices in-house, and better prepare the iPhone for the upcoming 5G push.

Facebook

Facebook’s largest acquisition has been WhatsApp Messenger, which it purchased for $22 billion in 2014. The WhatsApp acquisition is the second largest of the Big Five, following Microsoft’s LinkedIn purchase.

Facebook’s 5 Biggest Acquisitions:

Acquisition (Year)	Amount	Category
WhatsApp (2014)	$22 billion	Social Media
Oculus (2014)	$2 billion	Technology
Instagram (2012)	$1 billion	Social Media
LiveRail (2014)	$500 million	Marketing
Onavo (2013)	$200 million	Analytics

Aside from absorbing any competitors who encroach on Facebook’s turf—such as WhatsApp and Instagram—Facebook’s takeovers have been aimed at venturing into uncharted territory. The acquisition of virtual reality manufacturer, Oculus, is evidence of Facebook’s bet on virtual reality as the future of engagement.

“After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, or studying in a classroom of students and teachers all over the world —just by putting on goggles in your home.”

—Mark Zuckerberg

Predicting the Next Shift

The Big Five are some of the most influential companies in the world today.

Beyond rapidly reshaping the global tech landscape, these acquisitions provide important context on how tech companies consolidate power—and, more importantly, what will fuel their next phase of growth.

Chart of the Week

The Most Miserable Countries in the World

The annual Misery Index ranks the most and least miserable countries, based on four economic factors—unemployment, inflation, lending rates, and GDP growth.

Published

2 weeks ago

October 4, 2019

Katie Jones

The Most Miserable Countries in the World

Some people believe that happiness comes from within. In the world of economics, however, happiness may be more linked to quantitative factors such as inflation, lending rates, employment levels, and growth in gross domestic product (GDP).

This week’s chart uses data from Steve Hanke of the Cato Institute, and it visualizes the 2019 Misery Index rankings, across 95 countries that report this data on a consistent basis.

The index uses four key economic variables to rank and score countries:

Inflation
Lending rate
Unemployment rate
GDP per capita growth

Here are the Misery Index scores for all 95 countries:

Rank	Country	Contributing Factor	Misery Index Score
#1	🇻🇪 Venezuela	Inflation	1,746,439.1
#2	🇦🇷 Argentina	Inflation	105.6
#3	🇮🇷 Iran	Inflation	75.7
#4	🇧🇷 Brazil	Lending Rates	53.6
#5	🇹🇷 Turkey	Unemployment	53.3
#6	🇳🇬 Nigeria	Unemployment	43.0
#7	🇿🇦 South Africa	Unemployment	42.0
#8	🇧🇦 Bosnia and Herzegovina	Unemployment	38.2
#9	🇪🇬 Egypt	Lending Rates	36.8
#10	🇺🇦 Ukraine	Lending Rates	34.3
#11	Nicaragua	Unemployment	31.3
#12	Jordan	Unemployment	30.9
#13	Uruguay	Lending Rates	27.1
#14	Honduras	Unemployment	26.8
#15	Macedonia	Unemployment	26.4
#16	Armenia	Unemployment	25.1
#17	Jamaica	Lending Rates	24.9
#18	Saudi Arabia	Unemployment	23.5
#19	Colombia	Lending Rates	23.2
#20	Paraguay	Lending Rates	22.9
#21	Greece	Unemployment	22.5
#22	Algeria	Unemployment	21.9
#23	Costa Rica	Lending Rates	21.7
#24	Peru	Lending Rates	21.2
#25	Azerbaijan	Lending Rates	21.0
#26	Dominican Republic	Lending Rates & Unemployment	20.3
#27	Kazakhstan	Lending Rates	20.1
#28	Barbados	Unemployment	19.7
#29	Papua New Guinea	Lending Rates	19.2
#30	Georgia	Unemployment	18.8
#31	Mauritius	Lending Rates	17.9
#32	Serbia	Unemployment	17.4
#33	Guatemala	Lending Rates	17.2
#34	Pakistan	Lending Rates	16.7
#35	Sri Lanka	Lending Rates	16.0
#36	Spain	Unemployment	15.9
#37	Russia	Lending Rates	15.7
#38	Mexico	Lending Rates	15.4
#39	Indonesia	Lending Rates	15.2
#40	Trinidad & Tobago	Lending Rates	14.7
#41	New Zealand	Lending Rates	14.4
#42	Italy	Unemployment	13.7
#43	Mali	Unemployment	13.6
#44	India	Lending Rates	13.2
#45	Bangladesh	Lending Rates	12.6
#46	Albania	Lending Rates	12.2
#47	Ecuador	Unemployment	12.2
#48	El Salvador	Unemployment	12.0
#49	Philipines	Lending Rates	11.8
#50	Cyprus	Unemployment	11.7
#51	Croatia	Unemployment	10.9
#52	Bolivia	Lending Rates	10.8
#53	Canada	Unemployment	10.8
#54	Panama	Lending Rates	10.7
#55	France	Unemployment	10.7
#56	Australia	Unemployment	10.6
#57	Kuwait	Lending Rates	10.5
#58	Chile	Unemployment	10.3
#59	Estonia	Unemployment	10.3
#60	Romania	Lending Rates	10.3
#61	Iceland	Lending Rates	9.7
#62	United Kingdom	Lending Rates	9.6
#63	Belgium	Unemployment	9.3
#64	Norway	Unemployment	9.3
#65	Sweden	Unemployment	8.8
#66	Moldova	Lending Rates	8.8
#67	Vietnam	Lending Rates	8.7
#68	United States	Lending Rates	8.7
#69	Bulgaria	Unemployment	8.6
#70	Finland	Unemployment	8.3
#71	Hong Kong	Lending Rates	8.3
#72	Portugal	Unemployment	8.2
#73	Lithuania	Unemployment	7.3
#74	Slovenia	Unemployment	7.2
#75	Latvia	Unemployment	7.0
#76	Israel	Unemployment	6.8
#77	Denmark	Unemployment	6.8
#78	South Korea	Unemployment	6.5
#79	Poland	Unemployment	6.5
#80	Qatar	Lending Rates	5.8
#81	Slovakia	Unemployment	5.7
#82	Germany	Unemployment	5.6
#83	Malta	Unemployment	5.3
#84	Singapore	Lending Rates	5.2
#85	Ireland	Unemployment	5.1
#86	Malaysia	Lending Rates	5.1
#87	Czech Republic	Lending Rates	5.0
#88	Netherlands	Unemployment	4.7
#89	Taiwan	Unemployment	4.4
#90	Switzerland	Lending Rates	4.2
#91	China	Lending Rates	4.2
#92	Austria	Unemployment	3.9
#93	Japan	Unemployment	3.3
#94	Hungary	Unemployment	2.6
#95	Thailand	Lending Rates	1.7

To calculate each Misery Index score, a simple formula is used: GDP per capita growth is subtracted from the sum of unemployment, inflation, and bank lending rates.

Which of these factors are driving scores in some of the more “miserable” countries? Which countries rank low on the list, and why?

The Highest Misery Index Scores

Two Latin American countries, Venezuela and Argentina, rank near the top of Hanke’s index.

1. Vexation in Venezuela

Venezuela holds the title of the most “miserable” country in the world for the fourth consecutive year in a row. According to the United Nations, four million Venezuelans have left the country since its economic crisis began in 2014.

Turmoil in Venezuela has been further fueled by skyrocketing hyperinflation. Citizens struggle to afford basic items such as food, toiletries, and medicine. The Cafe Con Leche Index was created specifically to monitor the rapidly changing inflation rates in Venezuela.

Not only does Venezuela have the highest score in the Misery Index, but its score has also seen a dramatic increase over the past year as the crisis has accelerated.

2. Argentina’s History of Volatility

Argentina is the second most “miserable” country, which comes as no surprise given the country’s history of economic crises.

The 2018 Argentine monetary crisis caused a severe devaluation of the peso. The downfall forced the President, Mauricio Macri, to request a loan from the International Monetary Fund (IMF).

To put things in perspective, this is the 22nd lending arrangement between Argentina and the IMF. Only six countries have had more commitments to the international organization, including Haiti (27) and Colombia (25).

The Lowest Misery Index Scores

The two countries with the lowest scores in the index have one thing in common: extremely low rates of unemployment.

1. Why Thailand is the Land of Smiles

Thailand takes the prize as the least “miserable” country in the world on the index. The country’s unemployment rate has been remarkably low for years, ranging between 0.4% and 1.2% since 2011. This is the result of the country’s unique structural factors. The “informal” sectors—such as street vendors or taxi drivers—absorb people who become unemployed in the “formal” sector.

Public infrastructure investments by the Thai government continue to attract both private domestic and foreign investments, bolstering the country’s GDP alongside tourism and exports.

2. Hungary’s Prime Minister Sets the Score

Hungary is the second least “miserable” country in the world according to the index.

In 2010, Prime Minister Viktor Orbán implemented a workfare program which diverted menial tasks to thousands of job seekers. Over the same period that the program ran, the national unemployment rate fell from 11.4% to 3.8%.

Orbán won a controversial fourth term in 2018, possibly in part due to promises to protect the country’s sovereignty against the European Union. Despite accusations of populism and even authoritarian tendencies, the Prime Minister still commands a strong following in Hungary.