Recession cutback city - Even the rich people are doing it!

While the economy still needs stimulating quite a bit, those well off have been doing many of the spending to help. Even those who have a lot of money have quit spending money casually, reports the New York Times. The Federal Reserve said the economy in The United States is dying down. If conditions worsen, experts believe that one more stimulus may be necessary.

Jobs created when the rich spend

Spending by the top 5 percent of income earners in the US is needed to give demand for new jobs. “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. That one third is essential 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 numbers dropped in June 2010 the Times discovered. Rich people decided to drop the number to $ 119 per day. Were they leaning upon bank loans more than was their custom?

Losing business are luxury businesses

Early in 2010, luxury business showed strong numbers. As summer set in, reservations at hotels like the Four Seasons and Ritz Carlton fell. At the exact same time, retailers there just for luxury, such as Neiman Marcus and Saks Fifth Avenue, dropped in sales as well. Rich individuals are spending less and getting less Real Estate in Manhattan and the Hamptons. It was expected that spending would slow down with the recession since normal spending would cease for a moment, but we know there’s a significant problem with even the individuals with money have nothing left to spend.

Following where the Dow takes you

When it comes to deciding how the economy is doing, wealthy people consider different things than the average person. The Dow Jones is going to mean a lot to those who are invested than everyone else. The psychological affect happened right following the numbers got back to 10,000 after being within the 7,000s for so long. Spending rose in all avenues, including car sales. Luxury vehicle dealers did well, but of late, some luxury auto dealers have enacted layoffs of 15 percent of more of sales staff. Even for those rich people who can still afford to spend, the psychological impact of looking like a glutton when the majority of the country pinches its pennies keeps them from spending more, as outlined by studies by the Institute for Policy Studies in Washington.

Economic apocalypse on the rise?

It might be that “apocalypse” casts too dark a pall, but consider this. A skin care product saleswoman named Linda Stasiak explained the $ 15.95 tube wringer has top sales. It’s designed to squeeze each and every drop out of a tube – because today, even rich people are feeling the squeeze. Does everyone need a fast loan for their tube squeezers?

Citations

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