The “New Normal” for Consumer Spending and Retail Sales: Another Myth about the Affluent Market?
January 26th, 2010 
admin According to various retail consultants quoted in recent media publications, the current recession has average American consumers entering into a “new normal” that will be characterized by less household debt, higher personal savings, and less consumption. This behavior is being projected for the affluent market also, thus suggesting an extended decline in sales in the luxury category. Interestingly enough, the concepts of saving more and spending less are nothing new to the affluent market.
The affluent market has always leaned towards careful spending and aggressive saving, as clearly demonstrated in the 20 plus years of research by Thomas Stanley, author of the best seller “The Millionaire Next Door.”. The affluent typically live within their means and generally do not overextend themselves financially.
In a recent survey of the wealthiest 10% of US households, 80% of the affluent reported they plan to return to pre-recession spending levels. Most plan to return to these spending levels when they see clear and certain recovery of the economy and the recent losses in their net worth. As a factor for returning to pre-recession spending, certainty of job security and compensation are more important to the younger and lower net worth affluent groups than others.
Given the short memories and proclivity to shop among Americans, the numbers returning to pre-recession spending could be much higher than 80% . It makes sense that this group of careful spenders would return to previous spending patterns since those habits were not inflated in the first place. Apparently the “new normal” may not be that new for the true affluent.
The national survey included 684 affluent men and women with an average of $300,000 household income, $3.1 million average household net worth, and $1.2 million average value of their primary home.