Statistically Speaking: Generation X Dominates the Furniture Industry as Millennials Make Their Move

December 29, 2023  by HFBusiness Staff in Business Strategy, Industry   

Gen Xers households (ages 42 to 57) averaged $1,014 in furniture expenditures in 2022 followed by $770 for Millennials, $679 for Baby Boomers and $430 for Gen Z (adults 25 and under) (Table B). Our 2023 consumer spending article will focus on these generational households, quantify their spending and shed some light on what may be ahead for the furniture industry. A future article will look at each generation’s shopping choices and outlets and explore how each furniture channel can attract them to theirs.

In preparing this article, we have borrowed a quote from the Pew Research Center, a leader in generational studies, which says, “Generational signals can sometimes be lasting, but youth itself is not a permanent state.

Generational Influences Generational spending is sometimes a difficult concept to grasp as it follows the same groups through time who shared similar economic, domestic and world events during their coming of age. Generations get older together with the shared experiences and events shaping them throughout life. This approach is opposite to the traditional method of analyzing spending, and that is by looking at age and income at a moment in time. For example, traditionally, one might ask how much were 35- to 44-year-olds with incomes between $50,000 - $70,000 spending 15 years ago compared to today. In this example, the age group would have been from two different generations. The shared generational experiences can be wars, economic recessions, terrorist attacks, pandemics, medical discoveries, (i.e., birth control pills) or technological advancements, like the personal computer, cellphones or the Internet. Usually, the beginning of a generational identity (birth year) often begins with the adoption of a new technology.

Figure 1 gives an overview of each generational cohort and the cultural experiences and events that influenced them.

Demographics Millennials (ages 26 to 41) are now the largest generation alive numbering 72.3 million, which is 21.7% of the population and 27.7% of adults 18 and over (Figure 2). Immigration is expected to swell their ranks further. But not all Millennials have formed households, and are thus second to the Baby Boomers (ages 58 to 76) in consumer units/households. Boomers comprise 26.3% of the population 18 and over and are still the largest group of households at 32.4%. The smaller generation sandwiched between Baby Boomer and Millennials, Generation X (ages 42 to 57), represents 25.1% of the population over 18 and over 27% of households. Younger Generation Z (ages 10 to 25) comprise only 5.5% of consumer units, but their ranks will grow rapidly as more age into adulthood. Figure 2 shows the demographic detail followed by Table C which compares percent of adult population versus consumer units.

The growth rates in household formations for each generation prepandemic (2019) and post-pandemic (2022) were varied (Table D). Before the pandemic, very few Gen Zers (ages 10 to 25 in 2022) were out of college. But between 2019 and 2002, their numbers almost doubled. Millennial households (ages 26 to 41 in 2022) grew 5.7% over three years, which is a significant amount considering their already large numbers before the pandemic. Generation X (ages 42 to 57) grew less than 2% over the three-year period, and Baby Boomers less than 1%. The toll the pandemic took on the Silent Generation was wide spread with households declining 27.7% 2019 to 2022.

Income by Generation Generation X (ages 42 to 57) has by far the highest incomes averaging $126,892 per households in 2022, followed by Millennials (ages 26 to 41) at $100,315 and Baby Boomers (ages 58 to 76), $81,827 (Table E). But the higher the income bracket, the higher the taxes paid. In this case, Gen Xers paid 16.8% of income in taxes, Millennials 11.9%, Baby Boomers 11.6%, and young Gen Zers just starting out 5.3%.

One of the outcomes of the pandemic, was the explosion of incomes in the midst of a very tight labor market (Figure 3). Pandemic monetary assistance was also a factor. Millennials that had been crying the blues were all of a sudden getting higher paying jobs. Salaries for Millennials (ages 26 to 41 in 2022) who were three years older in 2022 than 2019, grew 27%. For Generation X (ages 42 to 57 in 2022) salaries grew 19.4%. Baby Boomer income rose only slightly by 1.2%. The average Gen Xer (ages 42 to 57) had 21.1% more disposable income than the average Millennial (ages 26 to 41) and 48.6% more than the average Baby Boomer.

Expenditures by Generation
So how did the different generations spend their money in 2022? With Gen Xers (ages 42 to 57) having the highest incomes, they in turn spent the most, $91,382, followed by Millennials at $74,782, and Baby Boomers averaging $66,362. Newly forming households by adult Gen Zer households (25 and under) spent on average $47,975 (Table B and Figure 4).

For all consumers, over one-third of their expenditures was spent on their homes, which included paying for the actual structure (rent/mortgage), utilities, household furnishings and equipment (including furniture), and household operation and supplies. And even though Gen Xers (ages 42 to 57) still spent more actual dollars on average on household furnishings and equipment, as a percent of their total spending, this generation also spent the lowest at 31.2%. The general rule for spending on the actual housing structure, either rent or mortgage payments, property taxes, etc., was that the younger the generation, the higher percentage of expenditures on basic housing. For example, Generation Z (adult ages 25 and under) averaged 25% of expenditures for rent or mortgages, Millennials 21.6%, Generation X 18.6%, and Baby Boomers 18.8%. However, the opposite was true for utilities. The younger the generation, the less they paid as a percent of expenditures. The same applies for household furnishing and equipment. Baby Boomers spent more of their income, 3.9%, on household furnishings. Figure 4 shows the total percentages of expenditures, including transportation, housing, food, healthcare, entertainment, education, and contribution to retirement accounts.

Household Furnishing and Equipment
Like many other consumer products, spending on household furnishings and equipment grew rapidly between 2019 through 2022. This category includes furniture, floor coverings, major appliances, small appliances/miscellaneous housewares, household textiles, and miscellaneous household equipment. Spending by Generation X (ages 42 to 57) for household furnishings totaled $3,355 on average per household (Figure 5), which was over 30% more than Millennials or Baby Boomers. In fact, Gen Xers (ages 42 to 57) outspent Millennials and Boomers in every household furnishing product area, except small appliances and miscellaneous housewares, and that difference was very small.

Table F shows the dominance of Generation X in household furnishings spending. In average household spending on furniture, Gen Xers outspent Millennials by 31.7% and Baby Boomers by a significant 49.3%. For major appliances, the difference was less than 20%. In the popular household textiles category, Gen Xers (42 to 57) outspent Millennials by 96.1% and Baby Boomers by 54.2%

In 2019 just before the pandemic, Gen Xers (ages 42 to 57) were leading all other generations in spending on household furnishings, but not by a lot compared to Millennials (ages 26 to 41) (Table G). But throughout the pandemic and beyond, the Gen Xer gap widened significantly. Bear in mind that all generations were three years younger in 2019.

Furniture Expenditures
Coming out of 2019, furniture sales were increasing across all generations but some took different sending paths in the immediate pandemic of 2020. Table H graphically shows the spending, while Figure 6 presents the detail. In 2020, during the worst of Covid fears, spending cooled among Generation X (ages 42 to 57) to 3.4% and more so with Baby Boomers where furniture spending was down 13% for the average household. All the while, younger generations, Millennials and Gen Zers (25 and under) were posting doubledigit increases in furniture spending in 2020 as pandemic money flowed in and a moratorium was placed on student loans. The spending craze for Generation Z (25 and under) and Millennials (ages 26 to 41) continued through 2021, and then slowed in 2022 as inflation set in. Gen Xers (ages 42 to 57) and Baby Boomers were a different story. While conservative during the heart of the pandemic in 2020, in 2021 and continuing through last year spending grew over 35% in 2021 and over 11% in 2022 for both Gen Xers and Baby Boomers.

As shown in Table I, when it came to buying furniture, in 2022, the average Generation X (ages 42 to 57) household outspent Millennial households by 31.7% and Baby Boomers by 49.3%.

Gen Xers (ages 42 to 57) will continue to dominate the furniture industry through 2025 as their affluence continues to grow. Some older Gen Xers are inheriting money from the quickly declining Silent Generation parents. However, Millennials will get the biggest boost for years to come inheriting billions from their Baby Boomer parents. Younger Generation Z (under 25) is also bursting on the scene, better educated, more ambitious and some say learning from the mistakes of Millennials.

A future installment of Stat Speaking will explore where they are spending their money, and how each furniture and home furnishings channel can lure them their way.