November, 2011 – This article from The Wealth Report of The Wall Street Journal discusses expectations that the richest 1% of Americans will spend about 2.3% more than they did last year on their holiday shopping. ( http://blogs.wsj.com/wealth/2011/11/29/what-the-1-want-for-the-holidays/?mod=google_news_blog )

By Robert Frank

The excesses of the 1% are now universally scorned – except when it comes to spending season.

Since the economy is so dependent on consumer spending, and consumer spending is dependent on the wealthy, the spending of the wealthy will be critical for a strong fourth quarter and possible recovery.

Early reports are mixed, depending on wealth and income levels. According to Harrison Group and American Express Publishing, consumers who make between $100,000 and $250,000 are expected to spend 17% less than they did in 2010.

Those with discretionary income of $250,000 or more, however, plan to spend 7% more than they did last year, the study found.

The American Affluence Research Center expects the richest 1% to spend about 2.3% more than they did last year. That increase comes despite (or perhaps because of) the unusually pessimistic outlook of the 1%.

“The wealthy can afford to brighten their lives by buying nice things to offset the gloomy environment,” Kurtz told CNBC.

What kind of bling are they buying to brighten things up?

According to Kurtz, the most popular gift that all income groups want to receive is money, either in the form of gift card, check or gift certificate. Ranking second was clothing. Among those worth $800,000 to $1.49 million, the third most popular gift is an iPad or similar tablet computer. For the $6 million or more crowd (the real one-percenters), the second most popular gift is books or CDs.

Fine jewelry was more popular with the affluent than the one-percenters (only 2% of the one-percenters want jewelry this season, compared with 8% for the affluent). Yet the one-percenters are twice as likely to buy sport equipment.

If that sounds overly modest, perhaps that’s because the survey didn’t include “G650″ “Feadship” or “Mulsanne” as gift options.

What do you think the 1% want this Christmas?

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November, 2011 – This Consumer Nation article on CNBC.com discusses the holiday spending projections for the affluent and their current mood concerning the economic situation. (http://www.cnbc.com/id/45278612/)

By Christina Cheddar Berk

Wealthy Americans may appear to the masses as a unified group, but there is divergence in the attitudes of the rich toward holiday spending this year — which means that the key to how the holiday season unfolds may rest in the hands of the wealthiest.

Affluent households, or those who represent the top 10 percent of American wage-earning households, are expected to account for 23 percent of the total 2011 holiday spending this season, according to Harrison Group, a market research firm.

Here’s the surprise: Although forecasts are calling for average — or in a few cases, above average — gains in holiday spending, gift-giving budgets of affluent families are down, according to Harrison’s research. However, among the wealthiest of the wealthy spending is projected to be higher.

The data collected by Harrison Group and American Express Publishing from 769 affluent Americans with discretionary household incomes ranging from $100,000 to more than $1 million dollars. It projects an overall decline of $1.04 billion, or a 6.1 percent drop, in plans to give gifts among affluent and wealthy families compared with 2010.

The decline in spending is being led by the consumers who make between $100,000 and $250,000. Those in that income bracket are expected to spend 17 percent less than they did in 2010, according to the study. On the other hand, those at the very top of the income spectrum, with discretionary income of $250,000 or more, plan on spending 7 percent more than they did last year.

Those who are cutting back are not doing it because they are worried about their economic situation, according to Jim Taylor, vice-president of Harrison Group. Instead, he suspects the shift reflects a change in priorities over the last few years, resulting in less emphasis on material goods.

A More Meaningful Christmas

“We’re a lot more mature as a society,” Taylor said. This means there is a desire to have a more meaningful holiday season, with the focus on spending time with the people they care about versus giving or receiving gifts.

“Expressions of happiness are being increasingly decoupled from the desire to acquire more and more things,” he said.

The American Affluence Research Center, which specializes in surveys and mailing lists of the affluent, also found that the wealthiest one percentile of households by net worth will be a pocket of strength this holiday season. The group expects the affluent as a whole to spend about 2.3 percent more than they did last year.

But the AARC is not seeing the same level of happiness that turned up in Taylor’s research. Instead, the group, which also polls a sample of the wealthiest 10 percent of U.S. households by net worth, discovered a record-low outlook for current business conditions and the 12-month outlook for the economy in their fall survey.

But Ron Kurtz, the center’s president, said the glum mood might encourage more spending.

“The wealthy can afford to brighten their lives by buying nice things to offset the gloomy environment,” Kurtz said.

Luxury Sales Seen Higher

If that is true, it would be good news for online sales, department stores and luxury goods.

Craig Johnson, president of retail consultancy Customer Growth Partners, expects sales of luxury items will rise 12 percent this holiday season, with strength in apparel, accessories such as handbags, and jewelry.

This is one factor in Johnson’s overall opinion that holiday sales will be much stronger than many industry analysts are expecting. (He is expecting retail sales to rise 6.5 percent from last year, which if true would be the best growth since 2004. This compares with the National Retail Federation’s forecast of 2.8 percent increase in holiday sales.)

But luxury sales also are being helped by a new crop of consumers who had previously not spent on luxury at all, but have been responsible for driving a significant portion of luxury spending growth this year, according to Ed Jay, senior vice president of American Express Business Insights.

These luxury newcomers make up about 61 percent of all luxury consumers and are responsible for 36 percent of all luxury spending, Jay said. By contrast, the active luxury spender, who is most likely a baby boomer, was responsible for 68 percent of all luxury spending, and when the recession hit, 25 percent of these consumers stopped spending, he said.

Also, the average consumer has been trying to spend more up-market and that has helped the luxury goods market, Jay said.

And that points to a growing perception that affluence doesn’t mean what it used to. An affluent consumer may not be someone who has enough expendable income to buy more goods; it may be a person who is so dedicated to a particular category that they are spending on those goods.

We’ve seen this behavior during the recession, as consumers cut back on nearly everything —but some still found the money to buy new gadgets such as iPhones and iPads.

All this means that if affluent consumers do focus more on experiences rather than goods, the luxury market still may see a strong holiday.

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October, 2011 – This Justluxe.com article features AARC research about affluent people’s assessment of current business conditions declined 36 points from the Spring 2011 survey to the Fall 2011 survey (http://www.justluxe.com/luxe-insider/trends/feature-1665183.php).

By Susan Kime

Negative Perspectives With Pockets Of Hope

I have written before about the American Affluence Research Center’s Spring 2011 numbers for JustLuxe, and prior to that, two articles on the Fall 2010 Survey for Luxist.

This research organization is a private group dedicated to providing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. The Affluence Center’s survey is one of the very few worldwide that presents research data and trends on the wealthiest 10% of U.S. households, which accounts for almost half of all U.S. consumer spending. In addition, the Fall and Spring surveys have been in existence for two decades, providing significant longitudinal validity and reliability to these measures.

Since I last wrote about the Spring 2011 survey, there have been substantial changes in the affluent mood, their outlook for the economy, their personal wealth, and their spending plans. This is the result of the disappointing news about current economic conditions and the stock market volatility.

Following the optimistic numbers in the economic outlook and spending plans of the affluent in the Spring 2011 survey, the Fall 2011 Survey shows that the affluent have returned to a “strongly negative perspective” (the Survey’s terminology) on current business conditions and future (12 month) outlook for business conditions, the stock market, and personal household income and net worth. The assessment of current business conditions declined 36 points from the Spring 2011 survey. This is the second worst historical negative rating, the worst being in Spring 2009.

These results are consistent with the general Consumer Confidence Index, reported by The Conference Board this August and September, which have also fallen to low levels, also last seen in April 2009. The negative mood of the general public and the affluent appears to reflect a number of factors which, for the affluent, include stock market volatility, a poor outlook for their personal household income and net worth, and the expectation that it will be several years before unemployment and the stock market return to pre-recession levels.

Indeed, about 60% of the affluent expect to take four or more years for an economic recovery to take employment back to pre-recession levels. There are no substantial differences of opinion among various levels of the affluent. Similarly, numbers wise, about 60% of the affluent believe that the stock market will recover in no more than three years.

The good news is that there is a sizeable segment of the wealthiest 10% of U.S. households that plan to continue spending for certain products and services, and among the wealthiest one percentile, in the spending plans for December holiday gifts. On average, the affluent households will spend over four times as much for holiday gifts as that estimated for all households in an October survey by BIG research for the National Retail Federation. Affluent households average $2,270 in gift purchases versus $518 for all families in National Retail Federation survey. Also, the Internet is a favorite source of holiday gift purchases, as it was named by 60% of affluents for 2011 gift purchases versus 39% in 2006.

For the affluent also, the changes in the stock market could be a positive factor if there is progress in the European financial crisis and in the U.S. Congress on debt reduction and economic stimulus. Given there are 11.4 million households represented by this survey, it can be estimated that the affluent represent potential purchases of 2.1 million autos, 1.5 million remodeling projects, 2.1 million cruises (total of 4.2 million cruisers), 752,000 primary homes, and 285,000 vacation homes. So, the possibility exists that even with a negative perspective, the affluent will continue to spend.

The Fall 2011 survey is the 20th in a continuing series of twice-yearly surveys that focus on the 11.4 million households that represent the wealthiest 10% of all U.S. households, as determined by The Federal Reserve Board, based on net worth. The net worth categories used on the questionnaire and in this report were selected to conform to the categories used by the Federal Reserve Board to define the wealthiest 10%, 5%, and 1% of U.S. households. The wealthiest 10% have a minimum net worth of approximately $800,000. The wealthiest 5% have a minimum net worth of approximately $1.5 million. The wealthiest 1% have a minimum net worth of approximately $6 million.

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October, 2011 – This Diamond News Broadcast article features AARC research about the affluents’ view on current business conditions and their plans for holiday gift spending this year (http://www.diamonds.net/news/NewsItem.aspx?ArticleID=37579&ArticleTitle=Diamond+News+Broadcast).

By Rapaport News

Global luxury goods sales have continued 2010’s double-digit growth trajectory and will see an increase of 10 percent, to €191 billion in 2011, according to Bain & Company in the 10th Edition of its industry bellwether “Luxury Goods Worldwide Market Study,” which was unveiled at a conference today hosted by Fondazione Altagamma (the Italian luxury goods industry trade association).

The study points to a consumer whose return to luxury spending is not simply a rebound, but instead a sustained renewal of spending on luxury apparel, accessories, leather goods, shoes, jewelry, watches, perfume and cosmetics. As luxury revenues have surged out of the trough and continued their momentum to record-breaking sales levels, the study shows, luxury distribution has undergone a significant shift, with 14 percent growth for direct-owned stores, more than 50 percent higher than the growth rate of wholesale and department stores. Direct-owned retail now accounts for nearly 30 percent of luxury sales worldwide.

“Top brands are now master retailers as well,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “Product still matters, but retailing strength has let luxury brands take control of their growth more than ever before.”

The post-crisis world of luxury goods has also proven that luxury’s mature markets are still relevant, both in absolute terms and in impressive growth rates. Bain expects 10 percent growth in Europe and 12 percent growth in the Americas for 2011 at constant exchange rates, although the weakening Euro eats into these growth rates by 3 to 4 percent. Japan yields the biggest surprise in terms of growth. It remains luxury’s second market. Declines, which stabilized to result in a flat 2010, have now reversed to five percent growth at constant exchange rates for 2011. The over 230 brands reporting 2011 revenue for the study report a much lower impact to luxury goods sales from Japan’s March earthquake; the effects on luxury sales lasted only one quarter before this year’s growth cycle restarted. Developing market growth (China, 35 percent; Brazil, 20 percent; Middle East, 12 percent) is still notable and remains a priority for brands. When factoring in spending in Mainland China and spending by Chinese tourists abroad, luxury consumption by Chinese people is now just over 20 percent of the global market.

The 10th Edition of Bain’s Luxury Goods Worldwide Market Study also finds that the luxury sector’s growth is robust, by looking at organic growth versus new openings. Comparable growth will exceed growth from new stores by 2 percent in 2011, indicating that luxury growth is not exclusively driven by store openings. Eighty percent of brands saw growth in 2011, with 20 percent of brands seeing more than 20 percent growth.

Finally, the study shows growth across all major luxury categories. Apparel will experience eight percent growth in 2011, driven by both menswear (9 percent) and womenswear (7 percent). Perfumes and cosmetics consumption will grow by 3 percent globally, with much of that growth found in emerging markets such as China and Brazil. As with 2010, however, accessories and hard luxury (jewelry and watches) are the strongest growth stories. Accessories (including shoes and leather goods) will grow by 13 percent in 2011, as consumers often rely on these products as an entry to luxury consumption. Hard luxury is delivering the strongest growth for 2011, however, with 18 percent estimated for 2011. Increasingly, consumers are shifting their hard luxury purchasing from unbranded to branded items, and purchasing these branded products in direct-owned stores.

”Despite the headwinds of global events and economic uncertainty, luxury is experiencing a sort of ‘anti-crisis,” concluded D’Arpizio. “We expect to see the sector continue to outperform other categories, if brands stay as nimble as they have been in their approach to recovery.”

The American Affluence Research Center produced the 20th in a continuing series of the original and only twice-yearly tracking studies of the mood and spending plans of the wealthiest 10 percent of U.S. households, which account for almost half of all consumer spending, this survey was designed to provide information critical to understanding today’s affluent and luxury consumers.

1 – Affluent to Spend $23.6 billion, 2.3 percent over 2010, on Christmas gifts, with a greater number of households buying gifts to offset plans to reduce gift expenditures by 3.7 percent per household.

2 – Affluent households to spend over four times the average family on Christmas gifts at an average $2,270 in gift purchases versus $518 for all families in National Retail Federation survey.

3 – Affluent men and women name the top two items on their Christmas gift list as currency and clothing.

4 – Over 40 percent of affluent families plan to reduce or defer expenditures due to economic conditions.

5 – Only 3 percent of affluent are “under water” with their mortgage, compared with 25 percent of all home mortgages; affluent have average equity in home equal to 72 percent of its market value.

6 – Internet is favorite source for Christmas gift purchases.

7 – Affluent turn very negative in their view of current business conditions and 12-month outlook for the U.S. economy, stock market, and personal income.

8 – Spending plans of affluent fall less than expected given their negative outlook.

9 – Pockets of strength exist in spending plans of the affluent.

Posted in Affluence Research, Apparel, Fine Jewelry & Watches, Holiday Spending, Luxury Market & Goods | No Comments »

October, 2011 – This Luxury Daily article features AARC research on the increase in 2011 holiday spending plans of the affluent (http://www.luxurydaily.com/10pc-wealthiest-us-consumer-holiday-spend-up-2pc-american-affluence-research-center/).

By Rachel Lamb

Although affluent consumers’ confidence fell sharply from the spring, there has not been a drop in intention to spend during the holiday season, according to findings from a recent study by the American Affluence Research Center.

Consumers are most likely to be spending in-store — in regular department stores and in specialty boutiques – and online, which has been steadily gaining share. The rich may still be spending because they still have a positive image of their own personal worth, as opposed to those less well-off.

“We are seeing some pockets of strength, particularly in the wealthiest of the consumers who are really the prime prospects for luxury goods,” said Ron Kurtz, principal of American Affluence Research Center, Atlanta. There are three factors that could be contributing to this phenomenon, according to him.

“The first is that during the recession, there was a large amount of uncertainty about personal compensation that has dissipated for the affluent and they’re feeling more comfortable about their personal situations lately,” Mr. Kurtz said. “People are also at the point of wanting to do nice things for themselves and for others to offset the gloomy environment.

“The third is that brands and retailers are doing whatever they can to coax the affluent and the enhancement of products and services and improved value to get them to spend,” he said.

Participants in this survey consisted of 499 individuals who make up the top 10 percent of wealthiest U.S. consumers.

They have an average household income of $282,000, an average primary residence value of $1.1 million, an average net worth of $3.1 million and average investment-worthy assets of $1.7 million.

Spending frenzy
Affluent consumers are becoming more comfortable with their spending habits and, in fact, intend to spend more this year than last, according to the research.

For instance, 3 percent of the U.S.’s wealthiest individuals plan to spend more on holiday gifts than last year. Sixty-nine percent expect to spend the same amount and 28 percent intend to spend less.

Approximately 10 percent of consumers that will spend $4,000 or more on gifts plan to spend more than last year. In addition, 51 percent will spend the same amount and 40 percent will spend less.

For both men and women, the top item that they wished to receive for the holidays is some sort of currency, such as a gift card, money or check.

Apparel and accessories are the second choice for both women and men at 33 percent and 42 percent, respectively.

The third choice for women is fine jewelry at 26 percent and books, CDs and DVDs at 23 percent for men.

Another big item this year is tablets.

“These people are realistic about how long it’s going to be before stock market and unemployment returns to prerecession levels,” Mr. Kurtz said. “They’re basically looking at three years or more until we get a real turnaround in those factors.

“Given the negative news that was going on in July and August in the stock markets when the survey was being conducted, the affluent are still relatively positive about spending,” he said. “And, in contrast to what kind of news that was going on in the market and in the environment, it’s somewhat encouraging to see that they still plan to spend.”

Channeling holiday spirit
Consumers will be spending on a variety of channels this year.

The Internet has seen the most share of total dollar value in holiday gift purchasing by the affluent.

The channel is named by half or more of all demographic segments except the highest net worth and older-than-60 groups, both of which are over 40 percent, according to the study. All groups indicate intentions to maintain or increase the share of business given to the Internet in 2011.

Based on total dollar value of holiday gifts purchased, traditional department stores have been losing share to other sources among the total group of affluent households, according to the study. However, they have remained a strong spending outlet for consumers in the highest net-worth group.

Additionally, specialty retail stores have been losing share to other sources among the total group of affluent households, according to the study.

“The thing is, this is a segment of the population which is fairly constant over time,” Mr. Kurtz said. “I know that some would like to say that there are new trends emerging over the years, but that’s over-blowing what those people are like.

“There has been a consistency for 30-40 years about being careful spenders, good savers and are focused on enduring style and fashion and quality,” he said. “They are not ones to jump on any kind of gimmick or new fads in the business.”

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October 2011 – This Wall Street Journal article features AARC research about how affluent people spend on holiday gifts (http://blogs.wsj.com/runway/2011/10/20/happy-holidays-to-the-rich).

By Christina Binkley

It will come as no surprise to Occupy Wall Street that the wealthiest 10% of U.S. households are responsible for half of all consumer spending here. That’s why researchers spend so much time analyzing their flush little psyches, to see how the prosperous feel about the future of the universe and all that.

One of those people is Ron Kurtz at the American Affluence Research Center. Twice a year, the center polls the mood and spending plans on the highest net-worth households in the U.S. Here are some tidbits they discovered in the latest round:

* Merry Christmas: The rich will spend $23.5 billion—an increase of 2.3% over last year—on holiday gifts.

* Now you know why there is a Neiman Marcus fantasy gifts catalog: They will spend four-times the average family’s outlay on holiday gifts: $2,270 in gifts versus $518 for everyone else.

* It’s not the thought that counts:

For the holidays, rich men and women say their most-wanted present is cash or a gift certificate, thank you very much.

* Party-on while Rome is burning:

Despite all that, the affluent have a record-low outlook for current business conditions and the 12-month outlook for the economy.

I asked Mr. Kurtz to share his thoughts on the underlying reasons for this predicted behavior. He proposed that “the wealthy are perhaps trying to brighten their lives by buying nice things to offset the gloomy environment. This is not an unusual psychological reaction.”

He also noted that the wealthy cut back on their spending in 2008 through 2010, when they feared their own job compensation and net worth was under threat. “Most of these concerns have now dissipated for the truly wealthy,” he said.

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This is a post from a WSJ blog (http://blogs.wsj.com/wealth/2010/12/07/will-tax-freeze-for-wealthy-create-jobs) referening AARC’s research about spending trends for the affluent market.

December 7, 2010

By Robert Frank
One of the core arguments for extending the Bush tax cuts for the rich was that the wealthy create jobs. Extending their low rates, conservatives argued, would encourage them to hire.

“I think that extending all of the current tax rates, and making them permanent, will reduce the uncertainty in America, and help small businesses to create jobs again …” said U.S. House Republican leader John Boehner.

We’ll now get to see whether the theory works. With President Obama making a deal with Republicans to extend the cuts for everyone for two years, the wealthy will keep their marginal tax rate at 36%. Just as important, rates on dividends and capital gains will remain unchanged and the estate tax threshold got pushed to $5 million.

I remain skeptical that keeping rates low will result in an increase in hiring. When I ask wealthy business owners and entrepreneurs why they’re not hiring, they rarely mention taxes. They say consumer demand. And jobs.

Countless surveys recently show that the wealthy also remain bearish when it comes to personal spending. Again, the reason isn’t taxes. The main reasons are larger issues like unemployment, the deficit, Europe and the education system.

“This is a group that will say ‘show me’ before they start spending,” Ron Kurtz, president of the American Affluence Research Center, based in Alpharetta, Ga., told Henry Unger of the Atlanta Journal-Constitution. “It’s got to get better before they’re really going to spend … and that goes for creating jobs, as well.”

According to Mr. Kurtz’ surveys, 41% of wealthy households (in top 10%) expect to spend less this year. He thinks their holiday spending will be flat or up 1%.

In other words, the wealthy aren’t likely to bankroll a recovery. They’re going to wait for one to start, then jump on board.

There are some economic benefits to the tax extension. Spending by the wealthy is one of the few forces keeping the consumer economy going, as the top 5% of Americans by income now account for 37% of consumer outlays. If their taxes had gone up, their current spending levels might have gone down.

So in the end, the extensions are more about doing no harm to the economy, rather than actually helping it. Not exactly the formula for a strong recovery.

Do you think the tax extensions for the wealthy will create jobs?

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This is a blog post from the Atlanta Journal-Constitution (http://blogs.ajc.com/business-beat/2010/12/07/wealthy-remain-cautious-in-spending-and-risk-taking/) referencing AARC’s latest research about affluent spending.

December 7, 2010

There’s been a lot of talk these days about whether tax cuts for the wealthy should be preserved to help stimulate the economy.

Turns out, it may not make much of a difference — especially in the short run — because the wealthy are not in a spending or risk-taking mood.

I sat down with Ron Kurtz, president of the American Affluence Research Center, based in Alpharetta. Kurtz has been conducting detailed economic surveys of the top 10 percent of American households twice a year since 2002. And right now — tax cuts or no tax cuts — the wealthy are cautious.

“This is a group that will say ‘show me’ before they start spending,” Kurtz said. “It’s got to get better before they’re really going to spend … and that goes for creating jobs, as well.”

Kurtz’s fall survey of the top 10 percent showed that they regard current business conditions as poor. The average on a 0-200 point scale was only 41. That was up from a dismal 11 in the spring of last year, but well below the 127 registered in the spring of 2007.

Before we go further, here’s who the survey attempts to gauge — 11.4 million households that account for nearly half of all consumer spending. Their average income is $256,000 and their average net worth is $3.1 million. The net worth of the top 10 percent accounts for 70 percent of the U.S. total.

“These people are so important to the overall economy,” Kurtz said. “It’s a small number of people with lots of power.”

As for their outlook about the future, the scores are better than their assessment of current conditions. But they’re far from upbeat.

When three results are combined about how they think the financial situation will look in 12 months — regarding business conditions, the stock market and personal income — the score is 97 out of 200. That’s up from 90 in the spring of 2009.

“They’re not expecting a big improvement. They’re not good numbers,” Kurtz said.

That’s reflected in their investment strategy, which is quite defensive.

Forty-six percent of the survey participants said their primary goal was to preserve capital. That compared to 33 percent who are looking for appreciation. While these numbers are a little less conservative than they were in spring 2009, they still indicate a cautious approach favoring Treasuries, certificates of deposits and other fixed-income plays.

On the spending front, 41 percent said they will make a conscious effort to reduce expenditures over the next year. That’s an improvement from the 60 percent who said that in the spring of last year.

As for the holidays, the wealthy said they will cut back this year. Participants said they will spend an average of $2,305 — 3.9 percent less than last year. Kurtz, however, believes that consumers generally spend a little more than they think they will. If he’s right, he thinks spending will be flat to up around 1 percent.

Unlike what some people think, Kurtz said, the wealthy are generally not conspicuous consumers. Most come from the middle-class and have retained those values.

“They’re aggressive savers and careful spenders,” Kurtz said. “They live within their means. The recession has made [that idea] even more important to them.”

To the not so wealthy, too.

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Retailers are likely to see Christmas and Hanukah gift spending by affluent consumers at or below the levels of 2009 expenditures according to a new survey of the wealthiest 10% of US households by the American Affluence Research Center (AARC).

In the AARC Fall 2010 Affluent Market Tracking Study #18, which is representative of the 11.4 million households that account for about half of all consumer spending, about 12% of affluent consumers said they will not buy any gifts for this holiday season.  According to numbers from a National Retail Federation survey of the general public, the overall average of consumers who do not plan to buy holiday gifts is 8%.  It would appear the affluent consumers are once again proving to be careful spenders.

Among affluent consumers planning to buy holiday gifts, about 3% said they will spend an average of 7.7% more than they spent in 2009. This is in line with numbers from an NPD Group market research survey showing that 9% of the general public (not specific to the affluent market) plan to spend more this holiday season.  According to a study by American Express Publishing/Harrison Group, only 5% of consumers with a household discretionary income of $100,000K or more plan to increase their holiday spending this year.

About 28% of the affluent market respondents in the AARC survey said they plan to spend an average of 14.9% less for holiday gifts than they did in 2009. This number is also consistent with NPD data on the general population showing about 30% planning to spend less in 2010 than they did in 2009.  The American Express number for reducing holiday expenditures is 21%.

The remaining 69% of affluent consumers in the AARC survey plan to spend the same as they did in 2009. Total holiday gift purchases by the affluent consumers is likely to average $2,305 in 2010, an overall average 3.9% decline from the average of $2,399 that affluent consumers say they spent in 2009. The American Express Publishing/Harrison Group study estimated the consumers represented by their survey will spend about $2,093 on gifts this year.  53% of this group is looking to reduce the number of gifts they buy.  The National Retail Federation predicts an average spend of $518 per adulton gifts by the general population represented by their October poll. 

Given that consumers often spend a bit more than they planned, especially during the holiday gift season, the American Affluence Research Center believes total spending by the affluent could be the same or perhaps slightly better than what it was in 2009.  This is also consistent with Deloitte’s prediction of a 2% rise in holiday spending and Nielsen’s prediction of a flat holiday season relative to 2009. On the bright side, while it may not be a banner year for retailers, it may not be worse than last year. The American Affluence Research Center’s national survey included 439 affluent men and women with an average of $290,000 household income, $3.1 million average household net worth, and $1.1 million average value of their primary home.

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This is a blog post from The Wall Street Journal (http://online.wsj.com) referencing AARC’s latest research about affluent spending plans for the 2010 holiday season.

Wealthy Families Plan To Spend $2,300 on Holiday Gifts

Originally posted October 6, 2010

http://blogs.wsj.com/wealth/2010/10/06/wealthy-families-plan-to-spend-2300-on-holiday-gifts/

By Robert Frank

By all appearances, the wealthy should be preparing to spend big this holiday season.

The millionaire population is back up. Stocks are well off their lows of 2009. And high-end incomes have held up fairly well – especially compared to the rest of the country.

But a new survey suggests the wealthy are planning to spend less or the same as last year.

The survey, by the American Affluence Research Center, polled 439 people with net worths of $800,000 or more, which represents America’s wealthiest 10%. According to the survey, the group plans to spend an average of $2,370 this holiday season, down from $2,399 last year.

More than two thirds of the respondents plan to spend the same as they did in 2009. Only 3% said they plan to spend more. About 28% plan to spend less. And among those spending less, the average decline was 14.9% from 2009.

A surprising 12% of the group said they’re not buying any gifts this year.

Of course, to most Americans, spending an average of $2,370 on holiday is a lot. But high-end retailers are unlikely to take much cheer in the finding, since so much of our consumer economy is now built on increased spending by the wealthy. The Affluence Center estimates that the top 10% now accounts for half of all consumer spending.

Why are the wealthy holding the line on spending this Christmas?

Ron Kurtz, president of The Kurtz Group, which runs the American Affluence Research Center, cited two main reasons. First, he said the wealthy have taken a hit to their net worths over the past three years and remain cautious. Second, he said they have a gloomy outlook for the future.

“They’re not looking for any improvement as far as household income, and they’re concerned about rising taxes,” he said. “I think there’s a bit of a negative psychological effect when it comes to their spending plans.”

Are you planning on spending more than $2,300 on gifts this holiday season? What will you be buying?

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