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Editor's Note: Below is a small taste of some interesting demographic developments from world-renowned demographer and Hedgeye Managing Director Neil Howe. Over the decades, Neil's work has garnered resounding praise from such polar political opposites as Vice President Al Gore and former House Speaker Newt Gingrich. (Click here to read Howe's complete biography.) 

For info on how to subscribe to his research email sales@hedgeye.com.

3 Investable Demographic Trends From Neil Howe - zhowe

Sales of recreational vehicles have hit historic highs—a trend fueled by increased travel, rising disposable income, and generational change. But investors take note: While hipster Millennials, nomadic Xers, and adventure-seeking Boomers may be buying RVs now, this procyclical industry is poised for a reckoning once the next economic downturn hits. (The Wall Street Journal)


Neil Howe: The explosion in RV sales started late in 2015--along with plunging gas prices and rising real medial family income. It has coincided, since 2016, with rising traffic miles driven (and fatalities--see: "How Millennials Are Steering the Future of Auto Insurance") and the retirement of populous Boomer cohorts who are now free to "go solo."

Also fueling the boom are younger Americans (especially late-wave Xers age 35-44) who can't wait to get "on the road." Boomers opt more for the pricier, plusher motorized RVs; younger consumers go more for the cheaper, towable campers. The prices of Thor (THO) and Winnebago (WGO) have been on a two-year rip, and sales continue to rise, contributing to the Trump-era surge in consumer-durable manufacturing.

Still, the demographic outlook is iffy: Fewer late-wave Boomers can afford the higher-margin models; and most Millennials will roll their eyes at all the risk, space, and hassle of ownership. The economic outlook is even iffier: Historically, recessions, gas-price hikes, and consumer credit crunches push these firms off a cliff. That's a lot of potential peril for stocks trading at 18-20 ttm PEs--nearly three times higher than Big Auto. RV investors better hope that SV techies don't invent a "sharing" app for these babies (oh wait, they already have!).

3 Investable Demographic Trends From Neil Howe - zhowe2

Air France has launched an airline, Joon, geared exclusively toward Millennials that offers features such as VR entertainment and in-flight smoothie bars. While this over-the-top offering may seem like a ploy, it could help Air France win brand loyalty among young flyers who would otherwise simply pick the cheapest option on Expedia. (Bloomberg Business)


NH: This trial is a bald, undisguised exercise in generational pandering. And it just might work. Young Xers would have despised such a Madison-Avenue designed pitch (Joon comes from the French "jeune" or young). But we all know Millennials think they're special. And besides, they really do like free Wi-Fi and smoothies and recycled cups.

The counter-argument is that Millennials thus far have shown very little brand loyalty when it comes to travel--and typically just pick the first thing that pops up on their OTA site. Marketers will be closely watching this Air France experiment.

3 Investable Demographic Trends From Neil Howe - zhowe3

Fully 25% of Gen Xers want to work for themselves in the next five to ten years—a higher share than any other generation. Xers’ freewheeling mentality and strong desire for work-life balance makes them a perfect fit for the home office. (World Options)


NH: Marketers often imply that the attractiveness of a gig-oriented, free-agent lifestyle is always inversely correlated to age, as though this were a fixed life cycle rule, valid across all decades. Not true. It changes by generation.

Back in the late 1990s, the correlation was basically correct because Xers happened then to be young adults and the Silent happened then to be retiring. But today, young-adult Millennials no longer aspire to self-employment--"gig" and "perma-temp" is something they do because they have no other choice. Xers, on the other hand, now well into midlife, still aspire to lifestyle freedom through just the sort of freelance franchising that platforms like World Options promote.

The guide is entitled, "Generation X: A Guide to Leaving the Rat Race behind and Working for Yourself." This company knows its customers. (Most Millennials, after looking around, figure that working for yourself is the rat race.)