Tags: michael | carr | Middle-Class | Consumers | Splurging

Middle-Class Consumers Are Splurging Again

By    |   Wednesday, 08 Dec 2010 09:38 AM

Recent consumer-spending data show little change.

Personal-consumption expenditures increased only 0.3 percent after inflation in the most recent report released by the Bureau of Economic Analysis. This was slightly less than the 0.5 percent gain seen in income, indicating a new-found sense of frugality seems to have taken hold of U.S. consumers.

Personal saving was actually reported to be 5.7 percent, far above the 2 percent average seen from 2005 until the recession threatened employment in 2008.

Looking a little deeper, it seems many consumers aren't living as sparsely as the data would indicate at first glance.

Luxury makers are seeing strong sales growth. Coach is a highly visible example, with their ubiquitous logoed purses. Sales grew by almost 13 percent in the most recent quarter. Analysts expect sales to continue growing at a double-digit pace into next year.

LVMH, maker of brands such as Louis Vuitton, saw a 16.5 percent increase in sales. Cosmetics giant L’Oreal, which owns names like Armani scents, enjoyed a 15 percent gain. Gucci trailed the pack, with 3.8 percent growth, a rate still twice as high as the official inflation rate.

Wal-Mart, known for catering to shoppers with lower incomes, saw sales grow only 1 percent. Costco, targeting households with twice the average income of Wal-Mart shoppers, grew 8 percent.

While consumers seem to be cutting back — if we believe media reports — the reality is that sales growth of companies offering small luxuries is outpacing the broad market.

This is a trend likely to continue, and one trend that investors should pay attention to.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
MichaelCarr
Recent consumer-spending data show little change. Personal-consumption expenditures increased only 0.3 percent after inflation in the most recent report released by the Bureau of Economic Analysis. This was slightly less than the 0.5 percent gain seen in income,...
michael,carr,Middle-Class,Consumers,Splurging
260
2010-38-08
Wednesday, 08 Dec 2010 09:38 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved