Wealthy individuals have been doing the spending with the economy needing to be stimulated. Now, as outlined by the New York Times, even the wealthy have quit spending like they used to. The Federal Reserve has acknowledged that America’s economic recovery has slowed. If conditions worsen, experts believe that an additional stimulus may be necessary.
New jobs created when spending occurs from all those with money
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. “One-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts,” is what, as outlined by Moody’s, that 5% account for, particularly those who earn more than $ 210,000 a year. As 60 percent of America’s economic fortunes depend upon consumer spending, that one-third is of super-sized significance. 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 numbers dropped in June 2010 the Times discovered. Only $ 119 per day was spent by Rich individuals. Were bank loans being used for this frequent spending and then stopped?
Businesses just for Luxury doing very badly
Early in 2010, luxury business showed strong numbers. Hotels like Four Seasons and also the Ritz Carlton lost many sales as summer came around. 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 starts to die.
Going where you have to for the Dow
Considering their greater level of personal financial investment, rich people check out different indicators than the average person when it comes to evaluating the financial weather. The Dow Jones is a benchmark that means more to those who are extensively invested. Since the numbers were within the 7,000s for such a long time, we can see the affect taking place when they hit 10,000 again. Even in car sales, spending went up everywhere. Luxury vehicle dealers did well, but of late, some luxury auto dealers have enacted layoffs of 15 percent of more of sales staff. While individuals are trying to just keep themselves fed and with a roof over their head, it looks quite bad for the wealthy to keep spending, according to a study done at the Institute for Policy in Washington.
Are there signs of a future economic apocalypse?
It could be that “apocalypse” casts too dark a pall, but consider this. $ 15.95 tube wringer sells the best according to Linda Stasiak, a top saleswoman for skin care products. It will squeeze every single drop out of the tube because everybody feels the recession coming down on them. Does any person need a fast loan for their tube squeezers?
More info about this topic at these websites
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
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