Recession has rich and poor cutting back!

Recession has rich and poor cutting back!

Wealthy people are doing the spending with the economy needing to be stimulated. But now the New York Times reports that even the big spenders have roped in their purchases. The Federal Reserve has acknowledged that America's economic recovery has slowed. If conditions worsen, experts believe that an additional stimulus may be necessary.

If rich people spend, jobs are created

Demand for goods and services create the need for additional jobs, and spending – particularly that of the top 5 percent of U.S. income earners – indicates demand. That top 5 percent, which involves those earning $ 210,000 or more annually, accounts for "one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts," as outlined by Moody's. That one 3rd is very important since consumer spending is 60 percent of the economy. Anyone who made more than $ 90,000 really spends about $ 145 a day as found by Gallup in May 2010.

In May 2009, it was 33 percent less than that. Unfortunately, the numbers for June 2010 were significantly lower, reports the Times. Rich people spent a mere $ 119 per day. Did they use loans from banks more often?

Luxury companies not doing well

Luxury companies were nevertheless doing great at the beginning of 2010. As summer set in, reservations at hotels like the Four Seasons and Ritz Carlton fell. Sales at luxury retailers like Neiman Marcus and Saks Fifth Avenue slowed at about the very same time. Rich people are spending less and purchasing less Real Estate in Manhattan and also the Hamptons. We know those low on money have to use an occasional fast loan to try and get by, but we know there's a problem when the wealthy spending starts to die.

Going where you have to for the Dow

The average person and also the wealthy person are going to view different things when deciding how bad the economy really is. Those invested are more interested within the Dow Jones. When the numbers finally climbed back above 10,000 after being mired in the 7,000s months before, they psychological affect was palpable. Spending went up in anything, even car sales. Sadly, sales went down and about 15 percent of luxury sales staff were fired with no place to go for work. While individuals are trying to just keep themselves fed and with a roof over their head, it looks pretty bad for the wealthy to keep spending, as outlined by a study done at the Institute for Policy in Washington.

Are there signs of a future economic apocalypse?

It could be that "apocalypse" casts too dark a pall, but consider this. A skin care product saleswoman named Linda Stasiak explained the $ 15.95 tube wringer has top sales. It will squeeze each and every single drop out of the tube because everyone feels the recession coming down on them. Fast loans for tube squeezers, any person?

Article resources:

New York Times

nytimes.com/2010/07/17/business/economy/17consumers.html?_r=1

Has the recession changed our perception of wealth?

youtube.com/watch?v=aCsIoHMxazs

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