It took some time for economic woes to distress rich Americans but it has finally hit. Now, economic problems for the rich may not be the same as for middle class Americans. However, when the wealthy start cutting back, get ready for a luxury trickle down movement.

Rich Americans are investing more conservatively, spending less on luxury goods and are being more thrifty with their credit cards. Now, they are even seeking the best deals rather than over-the-top extravagances. This is a true sign that things are really getting bad.

According to Joseph DiRenzo a married 38-year-old father of three who left a hedge fund two years ago to enter commercial real estate, “It’s a sluggish economy, and its difficulties are felt all over,” said DiRenzo.
Data compiled by research firm Moody’s from a 2006 federal survey revealed that 10 percent of households with the highest incomes account for nearly a quarter of all spending.
Scott Hoyt, Moody’s director of consumer economics, says “that does suggest those folks are important for the spending outlook and the overall economic outlook.”
Sara Johnson, an Economist at the research firm Global Insight suggests that other government data show households in the top one-fifth of the U.S. population ranked by income earn about half of all total personal income before taxes — an imbalance that gives the wealthy immense economic clout.
“Consumer spending makes up 70 percent of gross domestic product, and when one group accounts for a very substantial share of consumer spending, they also account for a large share of the economic activity that creates jobs,” says Johnson.
Unity Marketing, a Stevens, Pennsylvania-based firm whose clients include retailers in the more than $322 billion U.S. luxury goods market, said its latest poll of affluent people across the U.S. found a 20 percent decline in spending on luxury goods in this year’s second quarter, and the lowest luxury consumer confidence level in the nearly five years the survey has been conducted.
Just over half of the 1,024 respondents earning an average income of $204,800 predicted they would spend less on luxury in the coming 12 months than they did a year ago.
Luxury spending fell 4 percent last year, and this year’s decline is expected to be steeper, particularly for luxury handbags and clothing that don’t hold value, Unity Marketing President Pam Danziger said.
What kind of impact will this have on the luxury market? I guess it is now okay to use the word recession!

1 Comment

  1. y2E3mG xuspywqllhqt, [url=]rrgoxeijdsoc[/url], [link=]oxchydvtbtfy[/link],

Leave a Reply