Wealthy individuals have been doing the spending with the economy needing to be stimulated. Even those who have many money have quit spending money casually, reports the New York Times. The Federal Reserve has acknowledged that America’s economic recovery has slowed. One more stimulus might be around the corner with the economy getting any worse.
Jobs created when the rich spend
Demand for goods and services create the need for additional jobs, and spending – particularly that of the top 5 percent of U.S. income earners – indicates demand. That top 5 percent, which involves those earning $ 210,000 or more annually, accounts for “one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts,” according to Moody’s. That one 3rd is essential since consumer spending is 60 percent of the economy. Any person who made more than $ 90,000 really spends about $ 145 a day as found by Gallup in May 2010.
In May 2009, it was 33 percent less than that. The Times shows us that June 2010 had the number plummeting. Rich people decided to drop the number to $ 119 per day. Were they leaning upon bank loans more than was their custom?
Businesses just for Luxury doing very badly
In early 2010, luxury business were doing very well for themselves. As summer set in, reservations at hotels like the Four Seasons and Ritz Carlton fell. Sales at luxury retailers like Neiman Marcus and Saks Fifth Avenue slowed at about the same time. To add to this stop in spending on luxury, real estate in Manhattan and the Hamptons has dropped significantly. Sure, those who aren’t rich are forced to be more frugal and use the occasional fast loan, but if rich people stop spending, it’s panic time.
Following where the Dow takes you
Considering their greater level of personal financial investment, rich people look at different indicators than the average person when it comes to evaluating the financial weather. The Dow Jones is going to mean a lot to those who are invested than anyone else. The psychological affect happened right following the numbers got back to 10,000 after being within the 7,000s for so long. Spending rose in all avenues, including car sales. Unfortunately, sales went down and about 15 percent of luxury sales staff were fired with no place to go for work. A study done by the Institute for Policy Studies in Washington showed that those with money stopped spending mostly because it looks bad to spend so much while everyone else is just trying to keep a roof over their heads.
Are there signs of a future economic apocalypse?
Even though “apocalypse” might seem too strong, you may want to consider it. $ 15.95 tube wringer sells the best according to Linda Stasiak, a top saleswoman for skin care products. It’s intended to squeeze each and each drop out of a tube – because today, even rich individuals are feeling the squeeze. Fast loans for tube squeezers, anyone?
Discover more about this topic here
New York Times
nytimes.com/2010/07/17/business/economy/17consumers.html?_r=1
Has the recession changed our perception of wealth?
youtube.com/watch?v=aCsIoHMxazs
