Back to the hedonic treadmill?
What happens now that Fed chairman Ben Bernanke has officially declared the recession “ likely over?” Consumer spending, still sluggish, is finally on the rise. Nobody is yet breaking out the champagne – and as bloggers and cartoonists among others have warned, the economy won’t truly rebound until jobs return, and right now it’s still not a pretty picture. But is a new frugality here to stay, or will we soon return to some of our old ways? It may depend on your rung on the ladder. While working stiffs grabbed private label bread and took staycations, the richcurtailed their purchases of fine art and sold off the private jets. Sure, the recession slammed the fortunes of rich and poor alike – Bill Gates isout $3 billion -- but the families who had $20 million before the recession and then found their assets depleted to $14 million were never in jeopardy of going hungry. To some extent, the wealthy went on a time-limited spending diet because of a jarring hit to their balance sheet, and because for at least a while it appeared unseemly to flaunt lavish purchases when so many people had fallen on hard times. But here’s a truism which bears repeating: the rich can only hold out for so long. They really do need, or at least, really, really want what others may call non-essentials , like couture, art, and second homes. Once the stigma lessens, as Michael Silverstein of the Boston Consulting Groupsays, “…the rich will realize they're rich again and start to spend.” According to the 2009 Mendelsohn Affluent Survey, nearly a third of wealthy households purchased fine jewelry and a fifth purchased artwork or collectibles in the past year. As the recession slowly begins to thaw, the rich are very likely to go ...
