In our research and interviews for this month’s industry forecast article, we’re seeing continued, steady growth in the boat market.
Unit sales are up in the mid-to-high single digits, with similar growth projected for next year. It’s a growth trend that started several years ago, and it’s certainly better than the alternative.
But underlying that growth is the growing concern about who is going to be buying boats in the future. Where is that first-time buyer? What has long been a middle-class activity is becoming harder and harder for the middle class to afford.
A recent Pew Research Center study lays out some of the challenges we’re facing in reaching the middle class.
Now let’s be clear – the “middle class” has always been more of an idea than a clearly defined entity. Surveys have shown over the years that most people consider themselves “middle class” and it’s a nice way for politicians to say they are helping you and not those other people.
(For the purposes of the Pew study, middle-income households are defined as those with an income that is 67 to 200 percent of the overall median household income, after incomes have been adjusted for household size.)
What the Pew study shows is that middle class is, quite simply, being hollowed out. Once the majority of Americans, it is now, for the first time, less than half of all American households. In 1970, middle class households accounted for 62 percent of U.S. aggregate income. In 2014, it was 43 percent. At the same time, upper income households now account for 49 percent of income, up from 29 percent in 1970.
With that in mind, it shouldn’t be a surprise that much of the current boating recovery is being driven by larger boats.
The middle class also experienced the biggest impact from the Great Recession. With much of their household wealth tied into home values, the downturn hit them especially hard. From 1983 to 2007, the median wealth of middle-income families climbed from $95,879 to $161,050 in 2007. By 2010, the median wealth of middle-income families had plunged to $98,000, where it still stood in 2013, wiping out nearly 30 years of growth.
The demographics don’t look great either. The biggest winners since 1971 are people 65 and older – the only age group that had a smaller share in the lower-income tier in 2015 than in 1971. Those ages 18 to 29 saw a significant rise in their share in the lower-income tiers.
These are all scary numbers that reflect the real challenges facing the industry in the long-term – problems that will take creative solutions going forward.