More Americans Have Discretionary Income But It Is Concentrated in the Most Affluent Families

Total Discretionary Income in U.S. Now Tops $1.2 Trillion,

Says Comprehensive New Study from The Conference Board

Jan 10, 2005, 00:00 ET from The Conference Board

    NEW YORK, Jan. 10 /PRNewswire/ -- About 57 million U.S. households now
 have discretionary income, up from nearly 54 million in 1997-1998, according
 to a new study released today by The Conference Board. But the percentage of
 the American population with discretionary income has edged down to
 51 percent, compared with 52 percent six years ago.
     The study shows that 82 percent of all discretionary income is held by
 those earning $100,000 and more. Average discretionary income for this segment
 -- $62,110 -- is nearly three times above the U.S. average of $21,657.
     The Conference Board has been examining discretionary income trends for
 more than a decade. Households with discretionary income, as defined in the
 study, are those whose spendable income exceeds that held by households with
 similar demographic features. "Spendable income" is defined as money available
 after taxes have been paid.
     "Discretionary income is a major force in the health and growth of the
 overall economy," says Lynn Franco, Director of The Conference Board's
 Consumer Research Center. "Rising numbers of affluent households who control
 sizable amounts of discretionary income signal a favorable outlook for the
 luxury, travel and entertainment markets, as well as companies in the
 furnishings and housing sectors."
     Households in New York, New Jersey and Pennsylvania top the country in per
 capita discretionary income ($9,699). Ranking next are households in New
 England (including Connecticut, Massachusetts, Maine, New Hampshire, Rhode
 Island and Vermont), where per capita discretionary income is $9,522. Per
 capita discretionary income is lowest in the West North Central region
 (including Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska and
 Kansas) at $7,040.
     -- Households with earnings of less than $50,000 represent about 26
 percent of all households with discretionary income, but less than 3 percent
 of total discretionary income. Average household discretionary income in this
 group is only $2,075 -- 90 percent below the national average.
     -- The Conference Board study shows that households in the 35-50 age group
 constitute close to 36 million households, and nearly 20 million have
 discretionary income. This segment represents 34 percent of all households
 with discretionary income, and approximately 40 percent of all discretionary
     -- More than 14 million of the nearly 26 million households headed by
 persons between the ages of 50-65 have discretionary income. These 14 million
 households, who possess 30 percent of total discretionary income, make up
 almost 26 percent of all households with discretionary income.
     -- The remaining 22 million households are in the 65 and over age segment,
 and 10 million have discretionary income. This segment represents 18 percent
 of all households with discretionary income and nearly 13 percent of all
 discretionary income.
               Source: A Marketer's Guide to Discretionary Income
                 Consumer Research Center, The Conference Board

SOURCE The Conference Board