Many middle class folks in the country are feeling the adverse effects of the economic slump. Unemployment, decreased property values, and decimated retirement plans have instilled a fear in consumers that is further contributing to our economy's woes; if we are not spending, how can there be improvement?
It has been a common belief that the uber-rich are impervious to the financial despair of the average tax payer; however, the recession does not pick favorites, and the well healed are beginning to get the picture.
According to a survey by Moody's Analytics, roughly 33% of all consumer spending is done by the households that hold a position in the top 5% of income. Considering consumer spending accounts for nearly 70% of the country's GDP; one third is a significant figure. Until now the spending by the rich has helped slow the economic slide, although that trend seems to be changing.
A Gallup poll reports the average daily spending of upper-income consumers (those with incomes over $90k) has dropped from $145/day in May 2010 to $119/day in June of the same year. It is suggested that those with the big pay checks are finally coming to terms with the staying power of this downturn. The concern with this trend is; if consumers stop spending because they are worried about the economy, the economy will continue to falter because no one is spending.
Various reports from the retail sector are giving some indication of how the upper crust is adjusting its spending habits. Linda Stasiak, a supplier of high-end skin care products, said that her biggest sales increase has been for a $16.00 tube wringer that is designed to get every last bit of lotion out of the tube, stating that, "During peak time, I don't even really remember selling them". Another story tells that, even though the rich are still spending, they are making more sensible decisions. Justin Sullivan, a private jet broker in New Hampshire, says many of his clients are opting to lease propeller planes vs. jets, and he has also noticed a lot more clients bringing their own lunches instead of having catered meals.
Another mindset that is emerging from the recession is the reluctance to display wealth. For those who are not afraid to spend,some do not want to be looked upon as frivolous spenders. Tom Hauswirth, a luxury car dealer in Texas, says he sees many customers buying cars in the same color as their previous model, "They didn't want their employees to know they bought a new car", he said, "It doesn't look good during a wage freeze or when they are cutting people".
While it may be hard to garner any sympathy for the big earners, for the most part they all work very hard for their pay checks and are probably more apt to recognize when the wallet needs to be kept in their pocket.
So, when the person with the brown-bag lunch next to you on the bus gets off at the office tower, don't assume they are going to the mail room; they could very well be going to the top corner office.
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