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Survey: Wealthy to Slash Luxury Spending This Year

By    |   Wednesday, 12 June 2013 08:01 AM

Wealthy people are expected to slash spending on a range of pricey non-essential goods in the latter half of the year, according to the Luxury Institute, possibly signaling we are on the verge of another slowdown.

The Luxury Institute surveyed more than 500 pentamillionaires — people with a net worth of at least $5 million and an annual income of at least $200,000.

More than 80 percent of the respondents said luxury goods are less important in the current economic environment.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

A mere 6 percent said they expect to spend more on handbags throughout the remainder of the year, and only 4 percent plan to increase purchases of watches and jewelry, CNNMoney reported.

It appears that the wealthy are starting to shop more like the rest of America and are looking at price tags and weighing the costs versus the benefits.

Over 60 percent of the survey participants reported that the prices of luxury brands exceed the value, according to CNNMoney. More than 40 percent said they do not feel luxury products offer any additional value and they can be easily replaced.

That being the case, wealthy consumers are increasingly going to discount stores and big-box retailers for many items.

However, this change in sentiment should not be confused with a spending pullback that is driven by economic concerns.

According American Express Publishing's 2013 Survey of Affluence and Wealth in America, a majority of wealthy consumers never bought economists' claims that the recession is over, Time reported. But since the wealthy have generally gotten wealthier and were not personally affected, they have had no qualms about splurging.

And while the wealthy may be less concerned with purchasing certain luxury items, they are not about to stop spending. Affluent consumers are expecting to boost spending in key discretionary categories, such as electronics and automobiles, according to Time.

The Luxury Institute's research reveals a similar outlook. Specifically, 20 percent of those who participated in the survey plan to spend more dining out, and 33 percent expect to boost their travel spending.

"People are less interested in watches and more interested in building lasting memories," said Luxury Institute CEO Milton Pedraza.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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Wealthy people are expected to slash spending on a range of pricey non-essential goods in the latter half of the year, according to the Luxury Institute, possibly signaling we are on the verge of another slowdown.
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2013-01-12
Wednesday, 12 June 2013 08:01 AM
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