Wealth and spending go together like peas and carrots. A recently releasedSurvey of Affluence and Wealth in America, conducted by the Harrison Group and with American Express Publishing, found that the wealthiest 10% of Americans are ramping up their spending by $26.6 billion in 2011, which is roughly a 25% increase over spending in 2010. This has credit card issuers very excited, but their excitement may be premature.
The Facts and Figures
According to The New York Post, affluent consumers make up approximately 50% of consumer spending in the U.S. This year, these wealthy consumers plan to spend about $359 billion on luxury goods, excluding cars and travel, though automakers are expected to be among the biggest beneficiaries of the extra spending. Over the past year, spending by the wealthy on hybrid cars, travel, shoes, home décor and furniture has risen while spending on handbags and jewelry has fallen, The Post reported.
Who the Affluent Are
The survey covered households with at least $100,000 in discretionary household income. About 1,458 households participated in the survey, and more will be polled in the coming months. Among these households, 70% think the country is still in a recession, but fear of job loss and business failure is down significantly.
While the survey respondents indicated they would be more discerning in the items that they purchase, 25% more of the respondents said they plan to boost spending in the coming year. Unfortunately for credit card companies and other debt issuers, the majority of these consumers may be purchasing these items using cold-hard cash, considering the almost $4 trillion that have accumulated in their money-market accounts. So even if big spenders charge their new purchases, expect them to pay off the balance before much interest accrues.