Wealthy Americans don’t really think that good times are here again for the economy. But they’re going on shopping sprees anyway, with increasing sales seen for luxury hotel stays, high-end automobiles, and more.
The 2013 Survey of Affluence and Wealth in America, conducted by American Express Publishing and the Harrison Group, asked 1,416 Americans in the 10% income bracket about their spending habits and lifestyle decisions, as well as their thoughts on the state of the economy. Of those surveyed, the vast majority (76%) believe that the recession hasn’t actually ended. “Despite the clear consensus from economists that the recession is over, affluent and wealthy consumers do not believe that a real national recovery — neither economic nor emotional — has occurred,” Jim Taylor, vice-chairman of the Harrison Group, observed in a press release.
Regardless, the well-off say they expect to pick up spending this year in key discretionary (read: splurge-y) categories such as travel, electronics, jewelry, and automobiles. Compared to the first quarter of 2012, there has been a notable rise in wealthy Americans expected to spend more on luxury hotels and resorts (up 17%), home entertainment and electronics (up 17%), watches (up 10%) , and automobiles (up 18%).
The two survey results may seem at odds: If this group is of the belief that the economy remains shaky, why the eagerness to splurge? Are they simply trying to do their share to spread some money around and help economic recovery?
The recently released Pew Research Center report may offer some explanation. The study showed that from 2009 to 2011, the mean net worth of households in the top 7% rose by 28%, while everyone else collectively saw their wealth drop by 4% over this same time span.
So it makes perfect sense for the wealthiest households to be unimpressed with the economic recovery as a whole, and yet to personally be game to increase discretionary spending. While the poor (and the middle-class) have gotten poorer, the rich feel like they can splurge even more than usual because they have gotten significantly richer, largely thanks to the stock market taking off. “It has been a very good recovery for those at the upper end of the wealth distribution,” Paul Taylor, executive vice president of the Pew Research Center and co-author of the report, told the Washington Post. “But there has been no recovery for the lower 93, which is nearly everybody.”
Wealthy Americans aren’t merely saying that they’re spending more; by most indications, they actually are splurging more lately. In recent months, consumers who are well-off (or who merely want to appear so) have been picking up the pace on all sorts of luxury purchases. Businessweek cited data indicating that while the “luxury baby market”—that is, the luxury baby product market, not one involving sales of actual babies, luxurious or otherwise—declined a hefty 9.2% during the recession, but has rebounded recently. By 2014, the category is projected to hit $10.6 billion in sales, up from $9.4 billion in 2008.
Harley-Davidson motorcycles, which run $8,000 and up, have experienced rising sales after the recession caused a sharp fall-off in demand. According to CNN Money, the company forecasts sales of around 250,000 bikes this year, up from 223,023 in 2009.
Likewise, luxury automakers such as Bentley and Porsche haven been reporting rising sales in late 2012 and early 2013.
Spending on high school proms has increased as well, hitting an average of $1,139 per attendee this spring. Curiously, however, surveys show that less affluent families actually tend to spend more on the prom: The average student living in a household with less than $50,000 of annual income spends $1,245 on prom, compared to $1,129 for students with parents earning over $50,000.