Spending has stimulated the recent recessionary economy, and rich people have largely been the ones doing the spending. 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. Another stimulus could be around the corner with the economy getting any worse.
New jobs made with spending by the wealthy
Spending by the top 5 percent of income earners in the US is required to give demand for new jobs. Moody's explained that those earning $ 210,000 are in the top five percent and are "one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts.". That one third is important since consumer spending is 60 percent of the economy. Gallup found that those earning $ 90,000 or more – their "upper income" classification – spent $ 145 per day 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 spent a mere $ 119 per day. Were bank loans being used for this frequent spending and then stopped?
Losing a customer base are all luxury businesses
Luxury businesses were still doing great at the beginning of 2010. When summer began, hotels that normally would have more business, the Ritz Carlton and Four Seasons, were dropping in sales. Sales at luxury retailers like Neiman Marcus and Saks Fifth Avenue slowed at about the same time. Wealthy people are also getting less real estate in Manhattan and the Hamptons along with this sudden stop in spending. We know those low on money have to use an occasional fast loan to try and get by, but we know there's a problem when the wealthy spending begins to die.
Following where the Dow takes you
Considering their greater level of personal financial investment, rich individuals take a 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 anybody else. Since the numbers were in the 7,000s for such a long time, we can see the affect taking place when they hit 10,000 again. Spending went up in anything, even car sales. Luxury car dealers did well, but of late, some luxury auto dealers have enacted layoffs of 15 percent of more of sales staff. 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 when every person else is just trying to keep a roof over their heads.
Signs of an economic apocalypse?
Although "apocalypse" might seem too strong, you might want to think about 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 people are feeling the squeeze. Does anyone need a fast loan for their tube squeezers?
Sources for the article:
New York Times
Has the recession changed our perception of wealth?