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BizReport : Research archives : November 26, 2007

Americans have more discretionary income

According to a recent survey from The Conference Board, more Americans have discretionary income this year than in 2002. Does that mean marketers will have a banner holiday season?

by Kristina Knight

Not necessarily.

First, marketers must understand that simply having an extra $20 isn't "discretionary". For the purposes of the study, households with discretionary income were defined as those whose incomes exceed the income of households in similar demographic groups.

The study found that 64% (73 million) of Americans now have discretionary income; up from 52% (57 million) in 2002. In 2006, discretionary spending topped $1.7 billion. By household, the spend was reported to be an average of $24,335; per capita, that spend was reported to be an average of $9,148.

However, more than three-quarters of discretionary spending is accounted for by households making more than $100,000.

“While the percentage of households with discretionary income has risen over the past several years, purchasing power remains concentrated in the wallets of the affluent,” said Lynn Franco, director of The Conference Board Consumer Research Center.

Rather than simply hoping a household with spending cash will see an ad, marketers would be better served to geographically or demographically target the consumers.

According to the study, the majority of households with discretionary income are in the Northeast states and is lowest discretionary income is found in the West North Central states. California has the highest number of households with spending cash, followed by Texas, Florida and New York.

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