Why Rich Consumers Will Dominate Spending in 2013

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Customers carry an Apple Inc., iMac computer in front of an Apple Inc. store in San Francisco, California, U.S., on Friday, April 19, 2013. Apple Inc., is expected to release earnings data on April 23. Photographer: David Paul Morris/Bloomberg
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By Robert Frank

The consumer economy may look weak. But the affluent and wealthy consumers are ramping up their spending -- and that could help drive the broader economy this year. Two new studies show that wealthier consumers plan to increase their spending despite higher taxes and a generally skeptical view of economic growth and government.

A study from the American Affluence Research Center looked at the top 10 percent of consumers by income who account for more than half of consumer spending. It found that the majority of them plan to spend the same or more in 2013 as they did in 2012.

A separate survey from the Harrison Group and American Express Publishing found among the top 10 percent of earners, 25 percent plan to spend more on luxury this year -- up from 15 percent last year. Among the top one percent, nearly a third plan to spend more, up from 21 percent last year.

The main reason: rising stocks, better incomes and more job security.

While the wealthy remain fairly pessimistic about the overall economy and country, they are increasingly bullish on their own fortunes and finances. Fully 55 percent said their household assets have improved, while 41 percent say their incomes are higher.

About two thirds say the performance of the national government is worse than last year and more than half say America's reputation in the world is worse.

Jim Taylor, vice chairman of the Harrison Group, said that the affluent have high savings rates and generally feel insulated from the problems of the broader economy.

"When you look at their balance sheets, they're in the black and looking very robust," he said.

That doesn't mean, however, that the wealthy are throwing money around with reckless abandon. For many, memories of the recession still linger. Harrison Group found that today's affluent consumers come in two species: "worth dominant" consumers and "deal dominant" consumers. Jim Taylor, vice chairman of Harrison Group, said that "worth" consumers buy based on quality, craftsmanship and service and are expected to spend $58 billion on luxuries this year.

The "deals" consumers have been shaped by the recession and are looking for discounts. Taylor said they are driven by resourcefulness, self-reliance and a deep sense of financial responsibility.

"The lessons learned from the recession continue to dominate purchasing strategies in some of the country's most successful households," Taylor said. "They're not going back to unreasonable self-indulgence."

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val

Let me see the rich will dominate spending because they have more money..............

April 30 2013 at 4:40 PM Report abuse +1 rate up rate down Reply
drbuckles

Since 1970 wages have stagnated and the productivity increased for the first time in our history. So the question is where did all that wealth go if the workers didn't share in it? Capitalism became a failure at that point and now needs a reform or face a revolt of the people against its pundits, politicians, and economists who exhorted the trickle down effect of allowing the corporations,it's CEOs, board members, and share holders (top 10%), to see their standard of living raised and everyone else's degrade, and now have to face an austerity program for the decisions of people who lied, or didn't know what the hell they were talking about. Bad trade deals that aren't fair, unregulated banks, and allowing the wealth to leave the nation will end the republic faster than an attack of a terrorist ever will.

April 30 2013 at 3:33 PM Report abuse rate up rate down Reply
foxylynx

Unfortunately, less and less of us have discretionary income to spend - the Gov has seen to that and it is only going to get worse. The rich do not have to worry about anything, the rest of us worry all the time because we don't know what the Jackels on the Hill are going to do to us next.

April 30 2013 at 12:19 PM Report abuse +2 rate up rate down Reply
Hello, Judy

What a stupid article...of course, the rich will dominate spending, they're the only ones that have any spending money.

April 30 2013 at 11:55 AM Report abuse +4 rate up rate down Reply
tlcomm2

If "Fully 55 percent said their household assets have improved", then that is not true for 45% - nearly half. Exactly how is it good news that even half of our "rich" are being harmed by this economy???

April 30 2013 at 11:54 AM Report abuse rate up rate down Reply
setanta54s_back

yeah,ALL THOSE that have been nicklin and dimin IT while OTHERS were out and about with their credit cards livin large
will suddenly BE RICH !!!!!!!!!!!!!!!!
and all due to a small dose of self discipline and common sense.

and the rich will ALWAYS BE WITH US inspite of ALL THE BS OUT HERE attempting their class warfare--take it to cubAAA ,haitii,or venezuala.

April 30 2013 at 11:28 AM Report abuse -1 rate up rate down Reply
donhellbound

wow,that makes me happy.

April 30 2013 at 11:25 AM Report abuse rate up rate down Reply
goatcars

The rich dominate spending....Who woulda' thunk it !!!!! DUH!!!!!!!

April 30 2013 at 11:03 AM Report abuse +1 rate up rate down Reply
axman922

poor, poor rich people ! they sit back and help this economy take a big nose dive by sitting on thier cash and making more by lay-offs and price increases while normal people ( some anyway ) are kept out of the American dream so the rich can become richer and this they are proud of ? when the people wake up and see that all they want is to recreate " the old master over slave society " then thier money wont be worth spit. Rise up brothers and sisters before its too late.

April 30 2013 at 11:02 AM Report abuse +1 rate up rate down Reply
klugsw

Trickle-down economics. It works.

April 30 2013 at 10:50 AM Report abuse rate up rate down Reply