10/23/2013 6:15 PM ET|
High-end spenders shrug off economic headwinds
Weak unemployment data and gridlock in Washington aren't slowing down well-heeled consumers, who continue to open their wallets for big-ticket items.
Despite continued weak employment data and gridlock in Washington, consumers are showing surprising signs of confidence, and opening their wallets to buy big-ticket items ranging from washing machines to fast boats.
U.S. shipments of home appliances continued growing, helping double third-quarter profit at Whirlpool (WHR) as stronger U.S. housing sales offset weakness in much of the world. North America's largest appliance maker also boosted its full-year earnings forecast.
"We feel good about the fourth quarter" outlook for U.S. appliance sales, Jeff Fettig, Whirlpool's chief executive, said in an interview. Wholesale-shipments of the so-called Big Six appliance categories—washers, dryers, dishwashers, refrigerators, freezers and ranges and ovens—rose 6.3 percent from a year earlier to four million units, according to the Association of Home Appliance Manufacturers reported Tuesday.
Earnings and forecasts also are up at other companies making pricier and more extravagant consumer products. Motorcycle maker Harley-Davidson (HOG) and Polaris Industries (PII) whose products include all-terrain vehicles, reported Tuesday sharp increases in profit and sales for the third quarter. They echoed Winnebago Industries, (WGO) a maker of motor homes, trailers and other recreational vehicles, which posted strong quarterly results last week.
"The nerds and geeks are making tons of money," said Allen Sinai, chief economist at Decision Economics, a Boston research firm, even as the typical American suffers from stagnant wages and worries about layoffs. The latest employment data, released by the Labor Department Tuesday, offered little comfort about the health of the overall job market as employers added a fewer-than-expected 148,000 jobs in September. And many consumers remain wary.
But employees at many high-tech and energy companies, as well as some farmers, have been doing very well. A surging stock market and recovering house prices have helped to embolden well-heeled Americans.
Indeed, the wealthiest Americans, who took a significant hit during the recession, as stocks plunged and homes lost value, have seen a far stronger rebound than their less affluent neighbors.
The average household in the top 20 percent of earners has seen its income rise more than 6 percent since 2008, before adjusting for inflation, according to data from the Census Bureau; among the top 5 percent, the increase has been nearly 8 percent. Households in the middle of the income distribution have seen just a 2 percent gain, on average, while incomes for the poorest Americans haven't returned to their prerecession peak.
Even so, the average American household spent $51,442 in 2012, surpassing for the first time its prerecession peak, the Labor Department said last month.
"If you have a home and a stock portfolio, things are looking better," said Craig Kennison, an analyst at Robert W. Baird & Co.
That has translated into splurges. The hottest part of the boat market is in high-end pontoons costing as much as $100,000, said Jared Lacefield, a boat manufacturers' representative in Clovis, Calif. He said some of the most eager buyers are tech workers and nut growers. "The amount per acre you can make on pistachios is insane," he said.
Auto makers also have been doing best at the high end. Sales of luxury cars in the first nine months of 2013 were up 12 percent from a year earlier. By contrast, sales of inexpensive small cars, such as the Chevrolet Sonic, Ford Fiesta and Toyota Yaris, were up just 6.1 percent for the same period, according to figures compiled by Autodata.
In September, about 60 percent of the 45,944 pickups sold by General Motors (GM) were considered high-end models, equipped with leather seats, electronic features and higher-grade audio systems. "Definitely, the Detroit auto makers are all seeing people spending more for features even if they decide to buy an entry-level vehicle," said GM spokesman Jim Cain.
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If I'm financially secure, gridlock in Washington, and my neighbor losing his house isn't going to stop me from buying a boat (or anything) that I saved up for.
The middle calss gets screwed in all this?? Obama has taxes going up and earnings going down on a yearly basis. I am a 1%er, but my father was a Cop. We could get by because there was a fairness to the middle class. They work hard, don't take handouts and are the backbone of our country but the money for them is drying up. It's not fair. The Teachers, Police, Firemen, etc ...... are just getting by. If we didn't give so much money away to the lazy and worthless, we could give raises to those that deserve it.
Obama .....you should be ashamed of yourself!
When did "The American Dream" become a thing of the past? Why all of these class hatred articles?
nice try, meanwhile in other news do you people realize that if you 'don't' have a tax refund coming you DON'T have to pay the obamacare fine for NOT buying their outrageously overprice 'product' they can't fine you, they Can't garnish your wages, NOTHING, so structure your tax returns accordingly...I mean do you actually 'believe' that the gov't is 'giving' you anything back? you're already paying way more than ENOUGH in taxes, every year there's more to PAY in TAXES especially now with this nutjob marxist incompetent fool disgracing the white house,...so getting something back from 'them' is a ruse in itself...so now you know....
meanwhile the obama regime is blaming the Easter bunny for the glitch in the insanely inept healthcare.gov site....it appears the Easter bunny is a conservative, figures!
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