Or are they?
Last week The New York Times reported that the wealthy are "tightening their belts."
Until recently, affluent consumers had continued to spend, offering one of the few rays of hope for retailers suffering through these recessionary times.
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Now their confidence appears to have ebbed. At least that is the interpretation given the latest retail sales reports by some economic analysts, said The Times.
By affluent consumers, we mean top 5 percent in income earners — those households earning $210,000 or more. They account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody’s Analytics.
Any cutback in purchasing by this elite group produces a disproportionate reduction in overall retail sales. Ouch!
The Times cites the usual reasons for the downturn in spending – swings in dividend payments, investment losses, low interest rates on bank savings accounts, uncertainty about the future, and (here's a new one) fear of looking prosperous.
It turns out that some executives and business owners who have laid off employees don't want to buy new luxury cars because they're afraid of how that will look to their remaining workers.
If things get worse, will they leave their Porsches and Lexuses at home and take the bus to the office?
Click here to read the full New York Times article.
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