The CQ: Many Americans Believe Economy is Rigged & the Only-Child Boom
The Forerunner Team's Top Read of the Week
The CQ is Forerunner’s weekly newsletter rounding up the most pressing consumer news and analysis, plus some bonus musings from our investment team. Subscribe now to get the latest edition in your inbox every Saturday.
By Forerunner
What We’re Talking About on Slack:
Over the last two years, the New York Times has partnered with the American Academy of Arts and Sciences, speaking with people in every part of the country. Here’s what they discovered: Many Americans believe the economy is rigged. “When asked what drives the economy, many Americans have a simple, single answer that comes to mind immediately: ‘greed.’ They believe the rich and powerful have designed the economy to benefit themselves and have left others with too little or with nothing at all.”
Here are two theories for Americans’ dire economic outlook: food prices and partisanship or media negativity. When The Atlantic asked participants in a poll what are the factors they consider when deciding how the economy is doing, the price of groceries was by far the top answer. Even though groceries make up less than one-tenth of an average consumer’s total budget, food prices are what people encounter on a daily basis so it’s top of mind. Media negativity may play a part in this division as well. A study from 2017 to 2023, showed that “the media’s ‘negativity gap’—the gap between economic reality and media coverage—was nearly five times larger than it was during the previous three decades.”
A study may reveal the best way to work with AI. A scientific experiment put generative AI and workers to the test using real creative work tasks. What the researchers found to be the most effective way for businesses to use AI was to ask how the technology can support solving a problem. “Instead of maybe starting with AI and trying to improve those ideas with humans, maybe you should do it the other way around. Start with humans, with the diversity [of ideas], and then try to see how to improve these ideas with AI.”
About half of college grads have jobs that don’t use their degrees. And a new study reveals that the right first job and internships can have a lasting effect on workers’ earnings and career paths. If a graduate’s first two or three jobs are outside of their desired industry (for instance, a marketing major who takes on food-service supervisor positions to pay the bills), they will have a harder time returning to their marketing career path, especially since online hiring algorithms scan applicants’ work histories. Of the graduates in non-college-level jobs a year after leaving college, the vast majority remained underemployed a decade later.
Many Gen Z’ers believe in safety capitalism, which would offer a safety net for job loss or illness. While most young Americans support entrepreneurs and small business as well as private ownership, competition, profit, and the right to decide how to use one’s wealth, they tend to be more failure averse. One anthropologist attributes this to the helicopter parenting that many millennials and Gen Z experienced which could have helped delay adulthood and instilled in them a desire for safety. Which may explain these stats: 65% of Gen Z say the government should provide a job to anyone who wants one and 67% say unemployment insurance should match your current salary. But also: 72% say free markets are better than the government at picking winners, and 66% say government involvement in the economy hinders entrepreneurship. How this risk-averse mentality bodes for the future of entrepreneurship remains to be seen.
Gen Alpha are ready to spend—and they want to be treated like adults. The spending power of Gen Alpha is expected to reach $5.64tn by 2029, almost as much as Gen Z and millennials combined. There are few brands that target tweens and teens, but this generation prefers to shop where their millennial parents shop (at stores like Lululemon, Sephora, and Target) and they learn about new products through TikTok, Instagram Stories, and YouTube haul videos, just like Gen Z and millennials do. By expanding offerings for a younger demographic, brands can secure Gen Alpha’s loyalty. "Because this cohort is so brand mature, you have to be very aware of the authenticity of your brand. I do think that that's part of the reason that you see their affinities not towards the typical kid brands. It probably doesn't have the same authentic feel because it's almost like you're patronizing them."
The Wall Street Journal looks at the only-child boom and how things are going to get complicated when Mom and Dad age. In 1976, 11% of women were at the end of their childbearing years with one child; today the number has doubled. Because there are no siblings to share the responsibilities, only children carry the brunt of caring for their aging parents, which can exhaust them emotionally, physically, and financially. According to an AARP study, the out-of-pocket expenses for family caregivers is an average of $7,200 a year. Not to mention, that only children often have to drop everything to take care of a sick parent.
Friends affect how we view our finances, says a new report. Even when the economy and our personal money situations are doing well, researchers found that people were happier when they thought they were doing better than their peers, but they felt ashamed if their financial status was not as good as others in their friend group. Comparing oneself to others on social media exacerbated these feelings. “Around a quarter said they feel less satisfied with the amount of money they have because of social media, and a third said they have spent more than they could afford to ‘keep up with the Joneses’ on Instagram and other apps.”
Americans are paying nearly as much interest on credit cards and other debt as they are on their mortgages. In January, non-mortgage interest payments hit a record $573.5 billion annually, just behind the $578.3 billion spent on mortgage interest in the fourth quarter of last year—this has never been seen before in any data going back to the 1970s.
The Atlantic investigates Amazon’s big secret: how it makes its profits. The company has created the impression that it gets most of its profits from its cloud division Amazon Web Services (AWS), however the FTC’s antitrust lawsuit argues that Amazon’s e-commerce business is “enormously profitable” and that the company is not disclosing that its third-party marketplace is a huge source of its profits. The FTC alleges that the tech giant charges sellers who rely on its site to reach customers highly exorbitant fees—the Amazon’s marketplace generated $140 billion in seller fees alone in 2023, more revenue than Meta or Bank of America—yet information regarding how much profit was made from these transactions has been redacted from financial disclosures. In fact, Amazon has reported that over the past five years, their profit margin across its non-AWS units is only about 1%.
Portfolio Highlights:
Bloomberg, Barrons, Business Insider, CNBC, MarketWatch and Yahoo!Finance report on Hims and Hers’ impressive earnings.
Forbes’ list of the best startup employers includes several brands in our portfolio including Faire, Humane, Curated, Juni, Homebase, Cotopaxi, The Farmer’s Dog and Homebound.
CEO Kyle Leahy speaks to The Information about Glossier’s next chapter of growth. She also visited the Glossy Beauty Podcast to discuss how Glossier is similar to Taylor Swift, the revival of the brand and more.
CNET discusses how Humane’s AI pin hints at a phone-free future. TechCrunch announces Humane’s plans for its first international market, partnering with South Korean carrier SK Telecom.
Sandra Oh Lin, founder & CEO of KiwiCo, visits the Who What Wear podcast to discuss how she is helping to change the way children learn.
TechCrunch writes that TravelJoy is “riding the post-COVID demand for expert travel planning.”
Glossy covers how companies like Faire are increasingly using data to drive their strategic decisions, with quotes from Olivier Buffon, head of Faire’s international business.