From my Iconoculture news feed comes this sad story about well-to-do Boomers having to cut back on spending (accompanied by an appropriate tune on the world smallest violin).
The well-to-do are feeling the pinch of the current economic downturn, and they're changing their spending habits just as surely as the middle and lower classes. And since the top 10% are responsible for 25% of the spending in our consumer-driven economy, a slowdown at the top really puts the brakes on, as reported by the AP News Service in August.
Unity Marketing polled more than 1,000 consumers with an average income of $204,000. The company found that there was a 20% decline in purchases of luxury goods in the second quarter of 2008.Unity also found that luxury consumer confidence had reached an all-time low in the five years it has conducted the survey. Image that. The guys making an average income of $204,000 per year are feeling the pinch.
Luxury spending was already down 4% last year, and it's expected to take an even steeper dive in the next 12 months. When the affluent begin to scrimp, it can have a doubling effect on an already slow economy. After all, according to the “trickle down” theories, the affluent spending is supposed to eventually reach the poor 50-cents-a-day worker toiling away in a sweat shop in India or China, but only after it helps pay the salaries of 8-10 Americans - service workers, truckers, loading dock workers and others. Our trickle has slowed to a drip.
Today, even the affluent will respond to marketing that emphasizes value, durability, and quality-for-price rather than mere prestige for its own sake. What of vanity spending where price is the only significant brand distinction? That short of spending is going into mothballs. And remember that even the mothballs are now made in China.
Certainly we’ve seen this in the housing market for the last 2-3 years. The move-up houses of those well-to-do people just haven’t been selling. Anything above $300,000 has just been sitting on the market. And many of the foreclosed properties came as the result of some well-to-do person getting the Ziggy at work and losing their house (and many times, sadly their marriages) because of it.
But, hey! This is still America. So what if our affluent are slowing down their spending. We’ve still got our rich and super-rich and they’re still buying jet airplanes and super yachts and mansions and Bentleys. We just have to get in their trickle. Maybe if all of America’s 482 Billionaires buy some stuff we’ll all be OK. Of course there are 305 Million of us out there looking for our part of that trickle, so they may have to buy a lot of stuff.