The stock market is up about 80 percent from the recession low in 2009, and America’s rich are back to dropping thousands on shoes, bags and other luxury items.
Stores selling luxury items—Tiffany, Louis Vuitton and Gucci to name a few—were reportedly hit harder than other retailers in the recession. But now sales are soaring, so much so that many of those retailers are marking items up to attract more customers who equate price with quality.
But while the notion of spending so freely and exorbitantly is beyond the imagination of the average American, the rich are thought to contribute disproportionately to economic growth. So as long as they keep buying Louboutins and Porsches, the effects of their spending on the economy should eventually trickle down to Main Street. —BF
The New York Times:
The success luxury retailers are having in selling $250 Ermenegildo Zegna ties and $2,800 David Yurman pavé rings — the kind encircled with small precious stones — stands in stark contrast to the retailers who cater to more average Americans.
Apparel stores are holding near fire sales to get people to spend. Wal-Mart is selling smaller packages because some shoppers do not have enough cash on hand to afford multipacks of toilet paper. Retailers from Victoria’s Secret to the Children’s Place are nudging prices up by just pennies, worried they will lose customers if they do anything more.
While the free spending of the affluent may not be of much comfort to people who are out of jobs or out of cash, the rich may contribute disproportionately to the overall economic recovery.
“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics. “That was key to why we suffered such a bad recession — their spending fell very sharply.”