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Study: Spending plans for wealthy reach record lows

April 17, 2009

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Alpharetta, Ga.--More than two-thirds of U.S. luxury consumers have no plans to make any of eight major expenditures in the next 12 months, and acquisition plans for all of the eight items are equal to or at historic lows, according to the latest study from the American Affluence Research Center.

The study, titled the Spring 2009 Affluent Market Tracking Study, reveals that U.S. luxury consumers' plans to purchase vehicles have declined 30 percent from 2008, and home-remodeling plans are only half of what they were a year ago.

In addition, plans to acquire either a primary residence or a vacation home have declined to record lows.

Further, respondents in all demographic groups indicate that business conditions will be about the same in 12 months, and there is an expectation that personal income will be lower.

These findings, plus the indication of reduced savings among the group, suggest there is no expectation of a real economic recovery over the next 12 months. According to the American Affluence Research Center, this is a particularly gloomy outlook among the affluent, who are often a leading indicator of economic conditions.

Reflecting losses in their home value and investable assets/savings, preservation of capital is now the primary investment objective of the majority of respondents. This is a major reversal from previous surveys, where capital appreciation/growth was the dominant objective of most.

"The outlook among luxury consumers for an improvement in the economy and their willingness to spend are at all-time lows for our studies," according to Ron Kurtz of the American Affluence Research Center. "This signals continued weakness in the luxury market. Their concerns are underlined by the emphasis placed on preservation of financial assets, which contrasts with attitudes from prior years, when respondents said their primary objective was capital appreciation and growth."

The Affluent Marketing Tracking Study is a continuing series of twice-yearly surveys focused on the luxury market and the 11.2 million households representing the wealthiest 10 percent of all U.S. households, as determined by The Federal Reserve Board, based on net worth.

Participants in the survey have an average annual household income of $290,000, average primary residence value of $1.2 million, average net worth of $3.1 million and average investable assets of $1.4 million.

For more information about the American Affluence Research Center, visit its Web site, AffluenceResearch.org.
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