A long time ago—way back in 2009—frugality was cool, and showing off luxury items and high-end brands in conspicuous fashion was, well, unfashionable at the very least. There was talk of an entire “recession generation,” whose consumer behavior would always be affected by the era’s dramatic financial collapse. Yet in recent surveys, more people agree with the statement “I like it when others recognize me as wealthy,” and fewer consumers say that the recession “forever changed” how they spend and save.
Before the holidays, there were signs that the “new normal” (spending less, saving more) was already old and abnormal, replaced with—or reverting to—steady spending on luxury brands like Versace and Coach.
Now, USA Today reports that, indeed, the wealthy are kicking up conspicuous consumer behavior into a higher gear. Porsche sales in the U.S., for example, were up 29% in 2010, while vacation home prices in premier getaway destinations such as Cape Cod and Hilton Head have risen at the same time real estate prices in much of the country remains stagnant. Purchases obviously meant strictly for show-off purposes—a $525K watch, $20K for an in-home movie service that’d allow owners to watch films the same day they’re in theaters—are also surfacing, apparently with plenty of interested buyers.
The USA Today story also cites a survey that polled only consumers with discretionary income above $100K, 40% of whom agreed with the statement “I like it when others recognize me as wealthy” in the fourth quarter of 2010. Only 30% agreed with that same statement in the first quarter of 2009. Meanwhile, in early 2009, 59% of those surveyed agreed “It doesn’t feel right to wear expensive, flashy brands.” By the end of 2010, only 47% concurred—meaning there’s been a significant increase in how many rich people think it’s OK (more than OK, really) to be a flashy spender once again.
And there is nothing wrong with it, of course—if you have the money, that is. Go ahead and do your share to help the economy. But if you’re merely a “Poseur”—a term used by USC marketing researchers to describe someone obsessed with brands and “high status” goods, who wants to appear rich but doesn’t have much money—then flashy spending could easily lead to your financial demise.
52% of consumers say the recession has “forever changed” the way they spend and save, according to a recent survey by Citigroup. But that’s down from 63% when the same survey was conducted a year ago.
That shouldn’t come as much of a surprise. Consumers have short memories: One of the most common habits is called an “impulse purchase,” after all. This quote from the CNNMoney story says it all:
Kelley Long, a Chicago-based financial coach and CPA, sees this all the time. “People are willing to cut back when they need to, but it is more like they are postponing spending than they are changing it,” she says. “As soon as there’s a good economic report, they are on the next cruise.”