The Resilient Consumer?

 Those of you who are business news junkies such as I have seen and heard commentary that the American consumer is holding up very well these days.

Credit card balances exist but, on balance, are not out of control. Retail, always a tough game, is better than many expected going into 2025.

Dig a bit deeper and ignore the top line averages and a different picture comes in to focus. According to several sources in the consumer credit industry, it appears that approximately 60% of US households are living “paycheck to paycheck”. This means they do not have anywhere near the savings cushion of six months living expenses that most financial planners recommend for a family.

With that in mind, I went back to some Federal Reserve data. Each year, they publish a mini report that measures what percentage of American households could handle a cash emergency to cover a car or appliance need, an emergency health issue or other expense to the tune of $1,000.

Things have not improved over the last few years. Some 41% of households could not cover a $1,000 surprise expense with cash or check. Some 30% would put in on their credit card (already having a balance), 11% would go to family or friend, some would ask for a delayed payment or payment plan and a small group said that they would not pay. Interestingly, when I probed about the 11% going to friends or family (outside the Federal Reserve report), it appears some cannot go to friends or family anymore as they are tapped out as well or they have never been paid back from previous bailouts. Also, on a regional basis, 57% of people in the South could not come up with $1,000 readily and 54.6% of people in the Northeast were in the same boat.

Many Americans have no breathing room anymore. Most people need a car to get to work. Fortunately, cars are much more reliable than they used to be. Old timers (meaning me) remember the horrible cars that came out of Detroit in the early ‘70’s. After four years, they were largely ready for the junkyard. As I type, the average age of on road vehicles in the U.S. is at an all time high of 12.6 years. The average new car sold in the U.S. weighs in at $48,000. This is way out of reach for the bottom 40% of Americans.

There are some Nissan and Volkswagen models in the $20-24 range that are not loaded but can provide transportation but are not good for most families. About 9% of U.S. auto loan holders pay $1000+ a month in payments according to Lending Tree data. Credit analyst Experian pegs the average payment at $700 per month. Many of those are on 7 to the new 8-year loans! 

If someone is struggling, how about buying a clunker? Well, used car prices have been on the rise and remember, 40% cannot easily deal with a $1,000 repair bill and they are still borrowing to purchase the used car.

Another straw in the wind that I have observed is the growth of BNPL (Buy Now, Pay Later). They get the item they may desperately need but soon payments come due. Much the same has happened with student loans that are no longer deferred.

Most of you reading this may say that such sad statistics do not apply to me. Fair enough. Yet, if you are a marketer, you need to keep a very close eye on it. 

When the next downturn occurs (I have no idea when), the bottom half of America, already stretched, is going to be in a world of hurt. 

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Disney, ESPN, and The NFL

 Earlier this month, many of us were a bit surprised to hear that ESPN announced a non-binding agreement to acquire the NFL Network including items such as the Red Zone Channel and NFL Fantasy. The NFL gets a 10% stake in ESPN (ESPN is currently owned 80% by ABC, a subsidiary of Disney and 20% by Hearst).

This announcement comes shortly before the launch of Disney’s Direct to Consumer service which has been long awaited.

Some of you may be surprised to learn that the NFL network has been around for 22 years. Recently, it has been considered by many media analysts as a failing property that never really lived up to its original potential. ESPN, once a powerhouse in cable and in advertising revenue, has been slipping the last few years as well. Young people embraced smaller sports outlets with edgier commentary, and the rights fees became so high for some sports properties that they laid off many long-term employees in a cost cutting measure. Also, ESPN is a legacy media property in a world that is largely digital these days. 

Some see positives in that NFL Fantasy Football will merge with ESPN Fantasy Football. ESPN platforms will license an additional three NFL games that will air on the NFL network. The NFL will hold on to NFL Films and other platforms as well as the official sites for the 32 league teams. 

Okay, a lot of issues come up with this deal. Many need to be clarified but there are some questions  and observations that have come up to me and some friends:

1) Is ESPN now locked into Monday Night Football forever? Will they stay in the Super Bowl Rotation (ABC/ESPN)?

2) A few years ago, some clever Wall Street analysts thought that Apple or Amazon or even Microsoft would be smart to buy all of Disney, not just ESPN. One colorful analyst said that Apple buying Disney was a no brainer. Will Disney ever go on the block?

3) In recent years, Apple and Amazon have invaded streaming video with some excellent programming. Netflix, a strong financial performer and to date the winner in the streaming race, also got their feet wet with a slight introduction to football. The opinion of some, including me, was that if they wanted to get into sports, particularly football, they could bid up the cost of rights to the NFL and could snatch some games from the legacy media players. 

4) Also, a contender might have been Google with their popular You Tube platform. Again, they had the resources to pay up for a football package that few companies other than those referred to in item #3 could match.

5) The NFL would have to thread the needle on deals so there would not be complaints if ESPN received sweet deals relative to others who wanted the rights to the games.

6) Finally, when groups merge, there are likely to be layoffs in certain areas. For example, with the two fantasy football products reduced to one, staff reductions seem a certainty. Also, commentators and announcers will be reduced. Both ESPN and the NFL need to proceed carefully as many on air people have a significant following.

For decades, people have always referred to the Big Four in sports broadcasting—the NFL, Major League Baseball, the NBA and the NHL. In recent years, there has been no contest. The NFL is the dominant force among them. 

How this will all shake out is not clear at this point. 

It will be interesting for sure.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

HOW DOES YOU 401K BALANCE COMPARE TO OTHERS?

 As many of you know, the Vanguard group has the largest assets under management of any US mutual fund company. Recently, they published some data that I think many of you will find interesting.

For calendar year 2024, here are the average and median 401k balances among their customer base by age:

                                Average balance            Median Balance

Under 25              $6,899 $1,948

25-34                     $42,640                             $16,255

35-44                     $103,522                          $39,958

45-54                     $188,643                          $67,796

55-64                    $271,320                           $95,642

65+                        $299,442                           $95,425

Source: Vanguard, 2025

Okay, viewing this will likely produce a wide variety of responses. Some will not understand the difference between an average and a median. To refresh your memory, an average is a straight mix (mean)of all participants. Invariably, a relative handful of outliers with large or even huge balances will pull an average up. They are the top 10% of participants who skew all averages upward. The median, as we have often noted in this blog, represented the 50% percentile in this large sample. Approximately, one half are above or below this statistic.

To those of you doing the arithmetic, you will observe that the median balance tends be about 35-40% of the average.

If you look at your own 401k or 403b, do not be too upset by these data. You may have a nice pension that few have today, or you may live in a low taxed or low-cost state. So, your future may be more covered than you think.

Also, the New York Times followed up with a report about a week later stating that women in Generation Z, born 1997-2022, are much more aggressive about retirement contributions than men of that age. It appears that they are more financially savvy than previous generations.

Also, keep in mind that many with current seven figure balances have their retirement funds spread across several mutual fund families. Perhaps they worked at a few companies or, if the balance reached seven figures, they moved funds to other entities.

There are more millionaires in America than ever before. Many are retired. With current market levels as I type near or at all-time highs, this is not surprising. Had they shown balances of those 75+ rather than 65+, the odds are good that balances would show a decline from the 65+ data.

Remember that equities are higher now than last year so balances would be larger than what I provided above. Again, do not forget that many of us have retirement accounts with more than one firm. 

Minimum Required Distributions (MRD) kick in at age 72 and you can begin withdrawals without penalty as early as age 59 ½.

Markets fluctuate so some years participants will gain and during others they will lose.

If you would like to contact Don Cole directly you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Streaming Video is Officially The New King!

 Last month, I was away on vacation and my e-mail began filling up with people asking me to comment on Nielsen’s reporting that US households now spent more time with streaming services than they did with broadcast and cable TV combined.

No one should really be surprised by this news, but it does represent a watershed moment for both streaming and the TV industry.

Back in May 2021, the Nielsen company released their initial report of The Gauge. Since that time, in four years, streaming became the largest viewing format and sported an increase in usage of 71%. When Nielsen began The Gauge, streaming measurement was limited to Netflix, Hulu, Prime Video, Disney+ and You Tube. As we type, some 11 streaming platforms were incorporated into the May 2025 data. 

You may hear some media wonks use the term SVOD. It stands for Subscription Video on Demand (streaming). Netflix began streaming way back in 2007. Two financial giants involved are Amazon (Amazon Prime Video) and Apple. They can play the long game in streaming as they have arguably the deepest pockets in measured business history. I expect both to get bigger in to sports as they can outbid potential rivals without taking undue corporate risk. It is certain that both watched  the delivery of the NFL games streamed on Netlfix on Christmas Day last year which broke a record for live streamed audience.

A lot has happened since The Gauge kicked off four years ago. Then, broadcast and cable combined had two thirds of all TV time and streaming was 26%. Now that has flipped and some 78% of US households have at least one streaming service. This compares to cable peaking a few decades ago at around 72%.

How has streaming done it? Many people like the option of viewing commercial free. Others like the quality of the programming with many niche players such as Acorn and Britbox from the United Kingdom picking up a loyal following.

A big sleeper in streaming growth has been older Americans. As many cable channels began to rely on reruns of old series, older Americans have been embracing streaming. One reason is their children and grandchildren. While this is admittedly anecdotal, several people over 65 have told me that their children or grandchildren have set them up on a streaming platform or two. After a couple of months of subscribing and then binge watching the new fare, their young family members have taught them how to cancel and move on to other services. Several months later, they go back to an original service or two. One elderly lady told me that she cancelled cable at over $120 per month and now spends under $30 per month for streaming services and her enjoyment of her viewing options has soared. 

A forgotten player in all this is YouTube. Nielsen projects that 12.5% of TV time in May was on You Tube. Google has yet to monetize it fully, but that day may come. As an old movie buff, I sometimes find films on You Tube that are not available on any of my streaming services. Some have commercials, some do not.

Here are the Nielsen leaders in terms of share of TV Time in May 2025:

You Tube                              12.5%

Netflix                 7.5

Disney                                     5.0

Amazon Prime.                       3.5

Roku Channel                         2.5

Paramount                               2.2

So, our world is changing. It will be fun to revisit this issue in a few years and see how the viewing merry go round has developed.

To all of my American readers who now make up 42% of the Media Realism (MR) audience, I wish you a Happy 4th of July.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

POVERTY IN THE U.S.—PART TWO

 Last week, we discussed how the poverty level in the United States is stubbornly high and the threats that we face going forward with our current fiscal spending.

The spending bill passed by the US House of Representatives and now being amended by the US Senate had elements that appeared to save money by cutting Medicaid (health insurance to financially challenged Americans) massively over the next decade. While some cuts would take effect in 2026, the insurance industry and some political think tanks are projecting that by 2034 some 7.5 million Americans would lose coverage.

If this is even remotely accurate, many cash strapped hospitals, particularly in rural areas, would have to close. This means that overtaxed emergency rooms would face a dire existence, and overall public health would suffer tremendously. 

Why is congress looking at cuts in Medicare/Medicaid? The answer is simple. That, along with Social Security, which we will discuss shortly, is where the big money is in our budget. Most Americans do not get this. Over the years, several well-intentioned people have told me that to balance the budget all we have to do is cut defense spending. How naïve they are! This year, our interest on the national debt is higher than the defense budget and will soar if the current deficit laden proposal goes through.

Other people tell me simply “tax the rich” Make the billionaires pay more, they say. Okay, but there are not enough billionaires to cover the trillion-dollar deficits that the US government runs up most years. To balance the budget would require two unpopular actions:

1) Cut spending

2) Raise taxes on the upper middle class as well as the wealthy.

Neither seems politically viable given the present mindset.

Okay, besides Medicare/Medicaid, a huge crisis is brewing with Social Security. Both the office of Management and Budget and many, many analysts have been warning all of us that Social Security will go into serious deficit by 2034. The most prevalent projection is that, with the current system, benefits would be cut across the board by 24% in nine years. To some of us, the cut would be annoying but not affect what we eat for breakfast.

However, here a few chilling facts from the Social Security Administration itself. 

Among Adults 65+ who are collecting the monthly payments, 39% of men and 44% of women find that social security is 50% or more of their income. Yet, it gets worse. Some 12% of men and 15% of women are in the unfortunate position of Social Security being 90% of their income. A 24% cut would drop many from a lower-income life into dire poverty.

Congress, as the media like to say, simply “kick the can down the road” and the years tick by. The longer they wait, the more draconian the adjustment will have to be to keep the integrity of the present system. Some type of means testing will have to be done where those making several million a year plus, may get the payments, but it will all be taken away when they file their 1040 with the IRS. The upper middle class will also likely need to take some kind of reduction.

While putting these two posts together, sometime sent me a note saying “Jesus said the poor will always be with us. Why are you so worried about these two issues”?

 Why? We are Americans and should do better than this.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

POVERTY IN THE UNITED STATES

 For many of us, life has gotten better, at least economically, in recent decades. A nagging problem remains across the world but even in the wealthy United States—poverty.

Just what is it? The classic definition is a state or condition in which people lack the financial resources and other essentials for MINIMUM standard of living. They cannot meet what most of us would consider basic needs.

Those living in poverty may not have adequate housing, clean water, nutritious food, and proper medical treatment may be out of reach financially or geographically.

How does it happen here in the U.S.? Sociologists say that it is simply not low income. It could be lack of education or educational access, substance abuse, mental problems or discrimination. Governments across the world have put a variety of social welfare programs in place that have, to a certain degree, lifted some families and sometimes communities out of poverty. In the U.S. we tend to have fewer programs than European countries. Many refer to some Western European nations as “provider states” as they offer a level of cradle to grave security to all citizens. 

The World Bank projects that some 40% of the world’s population lives in poverty. The U.S. has reduced the poverty level from 16.5% to about 12% but, sadly, it is the highest among developed nations.

Why do I bring this up? Well, last week, the U.S. House of Representatives passed a tax bill that would lower taxes but also cut some provisions of Medicare and Medicaid. The bill has gone to the U.S. Senate where there will likely be many changes before it is sent back to the House of Representatives for approval.

For years, it did not matter much which major party was in power. Poverty rates declined slowly under ALL administrations. Yet, stat geek that I am, I notice one telling datum. Since the inception of Medicare and Medicaid back in 1965, poverty among senior citizens has declined steadily. 

So what? Well, Medicaid could be cut back for some needy seniors if the current bill is not amended. It, along with Social Security is a lifeline for many of the elderly. Here are some quick stats by state compiled by KFF Healthcare:

% of Citizens on Medicaid—Highest States

New Mexico 34%

Louisiana 32

Kentucky 28

California 27

West Virginia 26

Lowest States

Utah 11%

New Hampshire 13

North Dakota 13

Kansas 14

South Dakota 15

I understand why some members want to “reform” Medicare/Medicaid. The big expenditures in our budget are in these “entitlements” along with Social Security.  With the demographic shift to a grayer America, these entitlements will take a larger portion of the U.S. fiscal budget going forward. All need some type of reform. Yet, lowering income taxes for many of MR readers (including me) and the ultra-rich and then cutting Medicaid to the truly needy strikes me as a bit heartless. 

More to come next week.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Where Are The New Entrepreneurs?

 Over the years, repeated research studies indicate that, at one time or another, some 14% of Americans (approximately one in seven) become an entrepreneur for at least a brief period. This has been considered a very important part of the bustling American economy. New business start-ups that survive (most do not) are vitally important in job creation. They also are bastions of innovation and force larger entrenched companies to adapt and up their game.

Over the last decade, the share of U.S. households including an active entrepreneur has halved down to roughly 4%. 

There are several explanations for this:

1) In recent years, many college graduates with strong skills have discovered that they may earn high incomes with larger companies particularly in tech.

2) Business formation is tough for prospective entrepreneurs who often do not have access to capital. One part of this that I never see discussed is that Venture Capital firms (VC) and the larger Angel Investors (Informal Private Investors) are much more selective and smarter than they were 30 years ago. There was a time when someone could say “internet” and funds would come their way. The big VC firms made a bundle on the giants that still exist today but had many failures. Now, they have very shrewd teams analyzing start-ups and their batting average is much higher than it has been in the past. Angel investors have also improved their game as well. Early-stage financing remains a real problem for young upstarts.

3) Within the tech giants, entire squads are looking at new ideas and do not have to beg for funding. I will never forget the first annual letter from Jeff Bezos way back in 1997. He wrote “Given a 10 percent chance of a hundred times payout, you should take that bet every time.”** Okay, that is great for Amazon. However, can a bootstrap entrepreneur take a shot like that? Not likely. And, risk averse CEO’s and CFO’s in established companies in many cases have one goal—don’t screw up. They rarely bet on longshots.

4) Young people also have other issues that did not exist for previous generations. In recent years, I have spoken with dozens of college students who lamented that they would never own a home due to their huge college loan bills. I always try to be encouraging. The college loan overhang must be discouraging some prospective entrepreneurs from going out on their own. Do you wish to launch your dream knowing the odds are strong that you might fail and, despite bankruptcy you still must feed the meter monthly on your large college or grad school loan tab?

Can the situation be reversed? Critics say that loosening up on licensing requirements would help a great deal. Also, allowing health insurance at reasonable prices would help a start-up with only a few employees. Encouraging early access to accredited investors sounds great but is tough in the real world for many. Some politicians think a silver bullet is allowing newbies to write off R&D expenses immediately. That would help but they have to get the seed money first and launch.

I have long believed America became the economic powerhouse that it is and has been is due to how risk taking was encouraged. Look at the billionaires who have been minted in our country. Rockefeller, Vanderbilt, Carnegie, Ford and today’s tech titans. The uber-wealthy took giant risks and had many bumps in the road on the path to vast riches. When you fail, you keep going. America, a nation of immigrants, has always appealed to the risk takers of the world. Our bankruptcy laws may be the most lenient in the entire world. It you go bankrupt in many European provider states you spend the rest of your days paying off your creditors. Here you can come off the deck and keep fighting. America tolerates the risk takers unlike no other nation in my view. Immigrants with the right spirit can only help us grow.

If we can turn this entrepreneurial dip around, it could mean great things for our nation.

**Amazon.com, Inc. 2016 letter to shareholders

If you would like to contact Don Cole directly you may reach him at doncolemedia@gmail.com or leave a message on the blog.