In contrast to the March general Consumer Confidence Index of The Conference Board, which fell over 10% to the low levels last seen in Fall 2010, the affluent, who account for about half of all consumer spending, report a better outlook for the economy and their personal spending plans in a new Spring 2011 survey by the American Affluence Research Center.

Spending plans for all 17 products and services tracked by these twice-yearly surveys of the wealthiest 10% of US households are much stronger than in the Fall 2010 survey. There is also improvement in the plans to make major expenditures such as for a new auto, a cruise, and a vacation home. These results are consistent with reported sales during the first quarter of 2011.

Given the 11.4 million households represented by this survey, it can be estimated that the market segment represents potential purchases during the next 12 months of 2.4 million autos, 1.5 million home remodeling projects, 1.7 million cruise buyers (total of 3.4 million cruisers), 422,000 vacation homes, and 536,000 primary residences.

Men, those with a $6M+ net worth, and those under age 50 are the most likely to plan the acquisition of one or more of the 8 major expenditures listed. Most of the items have relatively large variations within age, income, and net worth segments. Reflecting a substantial amount of possible additional purchases, the “undecideds” or “don’t know” respondents are relatively numerous for autos (10%), cruises (8%), remodeling (5%), acquisition of a primary residence (4.1%), and acquisition of a vacation home (5.4%).

With the exception of the dining in casual/family restaurants index, which was unchanged, the index for all of the categories rose from the Fall 2010 survey, typically by 7 to 9 points.

The improvement has come primarily from increases in the “same” category and declines in the “less” category rather than increases in the “more” category.

In 16 of the 17 categories, two-thirds or more plan to spend the same or more during the next 12 months. There were 12 such categories in the Fall 2010 survey.

Domestic vacation travel continues to be the strongest category. Most of the categories are now higher than the Spring 2010 survey, when evidence of “frugal fatigue” first appeared in the surveys, and back to the levels of Spring and Fall 2008. The overall average is the highest it has been since 2008.

In 16 of the 17 categories, the segment with the strongest spending indexes is the under age 50 group. The differences within the gender, income, and net worth groups are generally minimal.

In general, the categories of services (vacation and leisure activities) appear to have somewhat better prospects than the other categories of tangible products. All three group spending indexes (home durables, leisure, and vacation travel) increased from the Fall 2010 levels, with the vacation travel category showing the most improvement and the other two groups up slightly less. All three groups are essentially back to 2008 levels.

Participants in the American Affluence Research Center survey have an average annual household income of $333,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.8 million.

A description of the Spring 2011 survey methodology and other detailed highlights of the survey can be viewed at:
http://affluenceresearch.org/most-recent-tracking-study/highlights-of-most-recent-survey/

Posted in Cruises, Entertainment & Recreation, Fine Jewelry & Watches, Home Entertainment Equipment, Home Furniture & Furnishings, Home Purchases & Remodeling, Luxury Market & Goods, Restaurants & Dining, Travel, Vacation Homes, Vacations | No Comments »

A record low level of spending by affluent consumers for home furniture and furnishings is suggested by the most recent survey in a series of twice-yearly studies that began in Spring 2002.

Negative attitudes about the current economy and the economic outlook for the next 12 months are contributing to plans for spending less on home furniture and furnishings by affluent consumers during the next year, according to the Spring 2009 Affluent Market Tracking Study #15 conducted by the American Affluence Research Center.

In the Spring 2009 survey of the wealthiest 10% of all U.S. households, spending plans for home furniture and furnishings during the next 12 months, in comparison to their spending for such items during the past 12 months, are to be increased by 10% of the affluent consumers and to be reduced by 43% of the affluent consumers. The remainder (47%) expects to spend the same for home furniture and furnishings during the next year as in the past year.

The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas.

The intentions to reduce spending for home furniture and furnishings are consistent with the overall mood of the affluent market. Over 80% of the survey respondents reported that they had made a general effort to reduce or defer expenditures during the past 12 months, would make a conscious effort to do so during the next 12 months, or had both done so in the past and would continue to do so in the future.

The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.

The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of the affluent market has a maximum margin of error of five percentage points at the 95% confidence level.

These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.

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Ron Kurtz is President of the American Affluence Research Center, which provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market.

AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.

Ron’s experience includes over 20 years in senior management positions in the airline, hotel, and tour business. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He also served as the chief marketing officer of four cruise lines, including Norwegian Cruise Line and Windstar Cruises.

Ron has been a key contributor to 6 start ups and 11 turnarounds of substantial businesses. He earned his MBA at Harvard Business School.

The American Affluence Research Center CONTACT: Ron Kurtz at 770-740-2200 or info@affluenceresearch.org. Website: http://www.affluenceresearch.org

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