October, 2013 – This article from the Wall Street Journal discusses how the affluent have a relatively positive outlook about the economy and economic growth due to the big recovery of the stock market. (http://blogs.wsj.com/economics/2013/10/30/rich-peoples-views-of-the-economy-near-pre-recession-levels/)
By Eric Morath
Affluent U.S. households, buoyed by a surging stock market, feel better about the economy this fall than at any time since before the recession began.
A gauge of sentiment about current economic conditions among the wealthiest 10% of Americans jumped 22 points from the spring to a fall reading of 93, a survey by the American Affluence Research Center showed.
It’s the first “neutral†reading after five years mired in “negative†territory. The last time the index found positive sentiment — above 100 — was the fall of 2007, just before the recession began.
The poll of 327 households with a net worth exceeding $800,000 found the rich feeling better because the stock market has climbed to new highs this year. Those households expect their stock portfolios and total net worth will increase over the next six months. They also have a positive outlook for economic growth.
The American Affluence survey was conducted before the 16-day government shutdown began Oct. 1. The shutdown, along with a battle over raising the federal debt limit, knocked down broader measures of consumer confidence. But wealthier households appear likely to pull through more easily, given their stronger income gains during the economic recovery.
The survey reflects a “relatively positive outlook,†said Ron Kurtz, president of the American Affluence Research Center in Alpharetta, Ga. “The stock market has made a big recovery…and these people control over 80% of all stocks and securities owned by the general public.â€
Despite the optimism, many wealthier Americans said they’re reluctant to open their wallets further.
Of 17 categories tracked by the biannual survey, respondents only expect spending on domestic vacations to increase during the next 12 months.
The affluent said they plan to decrease spending on designer apparel, fine jewelry and camera equipment. They expect to hold steady in most other categories, including entertainment, dining out and home furnishings.
The rich even said they’ll cut back on holiday shopping.
The survey found affluent households plan to spend an average of $2,175 on holiday gifts, a 2.8% decline from 2012. Still, the figure is nearly four times the amount the National Retail Federation forecasts the average holiday shopper will pay for presents and trimmings.
Constrained holiday budgets likely reflect some lingering caution. “This is a group that tends to be careful spenders and very aggressive savers,†Mr. Kurtz said. The average age of the survey respondent was 58, making them less likely to have children at home demanding toys and clothes, he added.
In fact, the most-requested present among affluent households is a gift card.
But there’s a glimmer of hope for the grandchildren: Last year, the rich spent 7% more than they said they would in the fall 2012 survey, Mr. Kurtz said.