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How the Wealthy are Spending Their Money This Year

Filed under: Wealth

Last week, I sat down with representatives from American Express Publishing and Harrison Group to see a presentation and discuss a question which is on many of our minds: How are the wealthy reacting to the recession?

Well, to start with, more than half (53%) are worried they could run out of money. Dr. Jim Taylor, vice chairman of Harrison Group, and Cara David, senior vice president of corporate marketing and integrated media of American Express Publishing spent approximately an hour display charts that showed the results of countless hours spent crunching the first-quarter responses of 1,300 Americans with discretionary incomes over $100,000 (that means income after tax, mortgage, home maintenance, and child education costs are subtracted).

This year there are 120,000 fewer households that fit in that range.

Of the 1,300 moderately-to-very wealthy Americans surveyed, 70% believe that the recession will last longer than a year, and 35% think this could be a long term depression. 78% report that the crisis has affected their sense of financial security.

So how does the spending look? "Luxury is not dead, there's simply a filter on risk," says Taylor. 77% said they are buying fewer "big ticket items" this year -- so it's a safe bet that they're buying brands they trust. There seems to be a trend among the wealthy of pride in their willingness to not buy things. This goes beyond the usual chatter of talking about great bargains you got; people are actually feeling an increase in their self-esteem related to their ability to take control of their own lives. Believe it or not, spending less is making people happier. People checking the "Very Happy" box went from 58% last year to 66% this year -- women up 10%, men up 4%.

Tags: american express publishing, data, harrison group, HarrisonGroup, money, recession, wealth

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Even The Big Spenders Are Worried

by Deidre Woollard (RSS feed) —

Filed under: Wealth

What a difference a few months make, earlier this year, I attended the Luxury Summit and heard research from American Express Publishing and Harrison Group. Now they've done a follow-up and the news is far grimmer. Their new research finds that 71 percent of America's affluent and wealthy consumers (10 percent of American families) say that real estate and banking crisis has affected their sense of financial security and the value of their assets. Now nearly 6 in 10 survey respondents are now worried about running out of money, including 48 percent of America's wealthiest families (a number up from 35 percent in April).

In a survey conducted on September 19-23, 614 affluent individuals discussed how the recent economic turmoil is affecting their financial and spending plans and revealed that 75 percent of the respondents believe the country is now in a recession. And how's this for a depressing fact, just fifty-five percent of the wealthy respondents are optimistic about their own future, down from 93 percent in 2005. Just one-quarter of respondents are now upbeat about the future of America while 60 percent were in 2005. This is big news for everyone because as Jim Taylor, vice chairman of Harrison Group points out, the top 10 percent represents over 50 percent of all retail spending. They are the ones who have kept the consumer economy afloat even as the middle class slowed spending dramatically.

One bright note is that 20 percent of American families are reducing gift giving so that they can donate to charity this holiday season. People are shopping with more thought and an eye toward saving. Many now wait for sales and are buying less. It's not great news for the retailers but it does seem a smart tactic in this economy.

Tags: harrison group, HarrisonGroup, spending, wealth