An article published last month by the New York Times recently caught my eye. It is generally one’s assumption that if the economy is not doing well, everyone cuts down on their spendings.
But apprently not. According to the survey, luxury goods are being purchased more often than consumer goods (ie. necessities.) While retailers such as Walmart and Children’ s Place are struggling to keep their consumers with small price increments, Mercedi Benz and Tiffany’s bracelets are being sold out in a flash. Caroline Limpert, a New York entrepeneur stated that the only reason she would buy less is “not to be showy” about her buying powers.
The interesting fact is that while middle-class families are scraping together their gas money and grocery funds, the rich is actually helping the economy on its way to recovery. (What?!)
“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics. “That was key to why we suffered such a bad recession — their spending fell very sharply.”
So I guess if the rich just keeps spending their money, we’ll all be okay?
Original NYTimes Article here.
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