Let’s go out on a limb regarding an aspect of consumer behavior.

Despite volatility since early 2018, the equity markets are valued at near historical highs; home prices have risen dramatically in recent years; unemployment is reported to be the lowest in a decade. Business is getting the biggest tax break we have ever seen, and supposedly so are quite a few individuals.

So, why are US economic growth projections sitting in the 1-3% range? And why are so many public companies setting 2018 guidance at low single-digit growth for Wall Street?

(Here is where we go out on the limb.) In part, it’s impacted by consumers simply not wanting as much stuff. There are exceptions – everyone seems to want Patagonia and Adidas, which are both are growing magnificently. And beauty products are up year over year, and smart electronics categories have grown. But those are the outliers. None of this, by the way, is about consumers transitioning from physical stores to online.

Think about this. The generation that bought McMansions with huge walk-in closets and 3 car garages, and then proceeded to fill every nook and cranny with furniture and possessions, is wrapping up the bulk of the discretionary spending that they will ever do. Long term care is the biggest category coming for Boomers.

But consumers aged 25-40 don’t want so much stuff. They are why we now have tiny homes and car sharing. Many are urbanizing and living in smaller places, with smaller closets, no yard to mow, and maybe no garage. Frugality is cool, and re-purposed goods are cool. From now on, companies that make and sell physical goods will have to compete with each other for slices of an overall pie that is essentially done growing for the foreseeable future.

Two exceptions: (1) brands and sellers that take strong positions on social issues and incorporate that into their brand stories will do well, of course at the expense of their competition; and (2) brands selling products that power the “experience” economy – that means travel, recreation, events, social sharing – will do well.

That is our big picture view. Thoughts anyone?