The Future Spenders of Tomorrow

Key Takeaways

• In 2000-2018, the US and other advanced economies have dominated spending trends. In the coming decade, China could replace US as the world’s biggest spender, with Chinese women playing a sizable role. Demographics, reduced poverty levels and rising wealth are likely to promote spending for China and other developing economies, like India.

• Women are poised to continue to be major drivers of global consumption spending, and consequently global growth. However, several key trends may emerge over the next decade that may alter the composition of GDP growth, and how businesses that provide household goods and services respond. Through 2030, older women, particularly those above 65, are expected to see the fastest rate of consumption growth.

• The overall anticipated changes in consumption pattern fit within Citi’s unstoppable trends of the rise of Asia and increasing longevity.

Advanced economies (AE) women have dominated spending

Consumer spending among AE women have helped drive growth before the global financial crisis (GFC). From 2000 to 2008, global spending from AE women rose from $10tn per year to $12tn. While AE spending was flat over the GFC, it picked up pace thereafter to reach $14tn per year by 2018.

Though AE women far outspend EM women on a per capita basis, in terms of absolute spending, EM women began to outspend starting in 2011.

Since 2000, the lion’s share of spending has come from US women, growing from $4.2tn in 2000 to $6.3tn in 2018.

The only other economy that has gained ground relative to the US is China – rising from a relatively meager $810bn to $4.1tn in the same period – a five-fold increase. While China’s share of total global female spending has increased quite dramatically, it remains outsized relative to the US (China: 13%; US: 20% in 2018).

Growth in the past from working age US and Chinese women

Working-age US and Chinese women topped spending over the 2000-2018 period. In both countries, the youngest (aged 0-15) and oldest (aged +65) spent the least, with spending rising the most quickly for Millennials/Gen Y (aged 15-30), Gen X (aged 30-45) and Baby Boomers (aged 45-65).

In China, spending among working-aged women boomed after the GFC, while in the US, the fortunes of women aged 65+ appear to have improved significantly in the same period. This trend likely reflected the swelling of financial asset and home prices, largely owned by older US women.

Conversely, Millennial/Gen Y and Gen X generations as of 2018 were still far from their pre-crisis trends. This most likely reflected job and wealth losses, student loan debt and poor labor conditions over much of the post-GFC period.

Older women to drive global spending ahead

Over the next decade, women are likely to play a pivotal role in driving global growth through spending, although main drivers are likely come from older women, and not younger.

Citi analysts think the highest age bracket of women may increase their consumption by more than two-thirds by 2030 globally (Chart 2). Spending by women aged 65+ may exceed those of the youngest age group by 2030, with the crossover occurring as soon as 2020.

However, this trend may largely be driven by AE and not EM women. Social safety nets and higher levels of initial income may underpin the consumption patterns of AE women relative to EM.

Rising tide may lift  “consumption boats” of all EM women

EM women are likely to continue to gain traction relative to AE, and in some cases exceed their AE counterparts over the next decade.

In every age cohort, EM women are anticipated to see consumption growth that is three to six times faster than that of their AE counterparts (chart 3). Unlike AE women, for which only women aged 65+ are likely to see notable increases in spending over the next 10 years, the rising tide may lift “consumption boats” of all EM women going forward.

Drivers of the anticipated female EM spending surge are both demographic and wealth related. Factors include higher population given higher birth rates and more EM women entering the middle class with improved education and healthcare access.

The role of EM Asian women in driving spending growth

Women domiciled in large Asian economies, such as China and India, are anticipated to supplant US women as the biggest global spenders by 2030.

By end-2019, the US is expected to top global spending among all nations at $13tn, with around half from women. However, by 2030, China ($17bn) is expected to have overtaken the US ($15bn) in total spending, with India ($13bn) close behind, having doubled its spending.

Notably, Citi analysts expect women in China to nearly double their spending from $4.4tn in 2019 to $8.2tn by 2030, which by then would be in excess of US women. In part, the sheer number of women overall who may be spending in China bodes well for China to exceed US women in spending.

Conclusion

Women are poised to continue to be major drivers of global consumption spending, and consequently global growth. In the coming decade, older women are likely to experience the fastest rate of consumption growth in the coming decade.

Further, compared to DM, EM women across all age brackets are likely to see a surge in consumption. Demographic changes and an increasing number of EM women moving into the middle class support the trend. Asian women look poised to unseat US women by spending group by 2030.

Overall, the changes in consumption trends fit within the trends of increasing longevity and the rise of Asia, which Citi analysts have identified as unstoppable trends.