As the Christmas season approaches, there is speculation about HNWI spending. As ever, the annual release of the Neiman Marcus Christmas catalogue showcases the very highest end of the gift market with, for instance, a description of the $1.5million “diamond experience” gift.
The serious consideration is what HNWI consumers really will spend.
According to economist Mark Zandi, the top five per cent of consumers account for more than 37 per cent of all consumer outlays. Increasingly, the wealthy are the only ones with money and confidence to spend, so they have disproportionate influence.
A BMO Private Bank study of American millionaires – the criterion is those individuals with investible assets of $1million or more – shows that 61 per cent say they are better off today than they were before the recession. Only seven per cent say they are worse off.
The BMO study also found that the wealthy are quickly returning to pre-crisis spending levels. Now, 86 per cent are back to peak spending on entertainment and leisure activities, while spending on travel has rebounded for 83 per cent. More than three-quarters are spending again on clothing and accessories.
According to Terry Jenkins, the president CEO of BMO Private Bank: “This represents an indication of the level of confidence millionaires have in the country and also helps spur further economic growth.” Spending by the wealthy has been highly discretionary over the last four years however and falling stock markets can have an immediate detrimental impact.
While the rich may be spending at the moment a debt crisis in Washington and decline in stocks could crush confidence and mean weak Christmas spending.
Source: CNBC.com
