The rich are spending on luxuries again
After a couple of years of restraint, America's wealthy are back to flaunting it. This is not all bad, but not everyone is happy about it.
This post comes from Lynn Mucken at MSN Money.
Conspicuous consumption is back in fashion. And, apparently, so is class warfare.
Buoyed by a resurgent stock market, wealthy Americans have shed the reluctance caused by the Great Recession and are spending again -- big time. The evidence is evident.
In December, the Bloomberg Retail Sales Luxury Index jumped 8.1% from the same month in 2009, while retail sales overall went up just 0.6%, according to the U.S. Commerce Department. Upscale retailer Ralph Lauren reported a 24% gain in quarterly revenue, while high-end grocery chain Whole Foods -- lovingly called Whole Paycheck by some -- announced a 12.6% gain.
This is good for the economy. Consumer spending is the engine that drives the American economic machine, and the nation's richest 5% of households account for 37% of consumer spending, according to Moody's Analytics.
"If the wealthy are buying, there's a huge downstream effect: It goes all the way down to the $50,000 (annual income) household," "Selling to the New Elite" author Jim Taylor, a marketing specialist with luxury brand consultant Harrison Group, told USA Today.
There's a perception problem, however.
While unemployment lingers around 9%, home foreclosure figures are stuck at scary levels, tons of Americans remain underwater on their mortgages and food banks are turning folks away, it's hard for most people to be happy for the rich.
And then there's the attitude factor. In the first quarter of 2009, 30% of Americans with annual discretionary income -- that's what you have left over after all those pesky necessities are paid for -- of more than $100,000 answered yes to this question: "I like it when people recognize me as wealthy." In the fourth quarter of 2010, the figure had risen to 40%, according to The Survey of Affluence and Wealth in America, conducted by American Express and Harrison Group.
The best way to show off wealth is by spending. And the rich are, according to USA Today, buying little trinkets like $80,000 battery-powered bicycles from Germany, $525,000 Swiss watches and $90,000 John Lennon-themed grand pianos. In the pipeline, with high expectations of success, are a hybrid Porsche for $630,000 and a $20,000 video player that, for $500 a pop, will allow you to play first-run films the same day they open in the theater.
"When Wall Street crashed, it was very unsettling among the kings and queens of the universe," Wendy Liebmann, CEO of consultant WSL Strategic Retail, told USA Today. "It was as much about mind-set as it was about money. They just stopped spending because it wasn't appropriate to be seen spending. But the affluent are willing to spend again."
There's been some backlash:
"Great, the rich can buy $525,000 watches while the poor suffer! This article turns my stomach," commented "Birdfish" on the Chicago Sun-Times website. "This is outrageous. And it must end. We should … put in place a luxury tax of 300%. This would only go on things like expensive cars, watches and mansions. If the rich want to consume conspicuously, fine. They should pay."
Wrote "August542" to USA Today: "Splurging isn't the sign of a restoring economy; it's what brought this economy down."
Supporters/appreciators of the rich fired back:
"Those who are blindly and manically resentful of whatever they consider to be 'The Wealthy' should just be mindful that it's likely they owe their livelihood to a member of that class," "Future is now" wrote the Sun-Times. "Today, it requires great wealth to build even modest businesses that can offer employment. So unless you're wealthy, keep your juvenile angst to yourself."
"Whine. Whine. Whine … Every time you read about some 'evil' wealthy person spending his/her own money, you get your panties in a twist," "smart guy" wrote to USA Today. "Who do you think provides the manual labor to build these cars, boats, or supply the services? The middle class. One of these days you'll figure it out."
And there's this one, which just might be sarcasm, from "Ralf-Peter" to USA Today: "It's all going to trickle down; trust us."
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