Washington Post: Recovery = waiting for rich people to spend some money

[Hannah Bell]

Waiting for Deep Pockets to Open
Recovery May Well Wait on the Wealthy to Step Up Their Spending

Washington Post Staff Writer
Wednesday, September 9, 2009

In this new era of frugality, well-to-do shoppers have gone into hiding and stowed away their splashy logos. But they may hold the key to a consumer recovery.

Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. The top 20 percent of the nation's households -- with income of at least $150,000 -- account for 40 percent of all spending, according to government data. That makes them a crucial spoke to any turnaround.

"Unless these people turn up, a lot of companies won't turn up," said Milton Pedraza, founder of the Luxury Institute, a consulting firm. "When they are not spending, it definitely impacts all of us in a negative way."

Conditions are beginning to improve for the well-to-do. The recent runup in the stock market and signs of stabilization in real estate prices -- the two sectors with the most influence over wealthy consumers' balance sheets -- are setting the stage for their return. Already, wealthy shoppers say they are cutting back less and don't worry about money as much as other demographic groups, according to a recent Gallup report.

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/08/AR2009090803519.html


golly gee, glad conditions are beginning to improve for the well-to-do!

you probably didn't realize the economy was dependent on the top 20% purchasing $300 ball gowns, did you?

[Joanne98]

1. GRRRRRRRRR

[ixion]

8. indeed...

:grr:

[BrklynLiberal]

2. What a crock of crapola.......Here we are again...trickle down economics.

:puke: :puke: :puke: :puke: :puke: :puke: :puke:

[hobbit709]

5. The only thing that trickles down is warm, wet and yellow.

[BrklynLiberal]

16. LOL.....

[kestrel91316]

3. If they don't want to spend their money, I say TAKE it from them. Raise their taxes.

Make them pay the percentage I pay.

[Taverner]

6. Agreed. Now is when any responsible economist would suggest wealth redistribution

[dana_b]

4. so glad that the rich and Wall Street are recovering

I guess their plan for recovery worked, right? sigh..

[truedelphi]

7. !+1 n/t

[fasttense]

9. This is pure bull.

There is no possible way a viable economy can flourish with only 20% of Americans spending money. Maybe a handful of corporations can prosper on a handful of rich people spending, but without the majority of Americans spending this country is sunk.

[kenny blankenship]

15. There are lots of (other) Third World countries where this model prevails

Why not here?

Of course, there could be some unhappy ramifications down the road a bit...

[leftstreet]

10. Please Sir, I want some more

K&R

[yurbud]

11. meanwhile, the rest of us will probably have to resort to cannibalism and living in cardboard

shanties.

[BuyingThyme]

12. Keep waiting. Rich people don't spend money.

[n2doc]

13. How about- Tax them, give the money to those who WILL spend? n/t

[Warpy]

17. or provide seed money for people who want to start

industries in this country, repairing our infrastructure and building new infrastructure.

We need so much in this country and after 30 years of having everything looted away from workers and government the place is falling apart.

Most people need jobs, not handouts. With the wealthy refusing to invest in their own country, it's time to strip them of everything they've stolen away from the rest of us through a new system of progressive taxation.

They'll scream bloody murder, of course, but they're still screaming now with their taxes at the lowest point since Hoover's administration.

Maybe this time we'll learn: the most disloyal class is always the plutocracy.

[dajoki]

14. K&R

[Hidden Stillness]

18. These are Exactly the Indicators of Deepening Recession

(The Washington Post was recently exposed holding seminars for lobbying and consulting firms, offering to sell them space in the "news"paper, so they could actually write puff pieces for themselves as if they were staff-written news reports. Maybe this is one of them; it certainly is a piece of shit. Where to begin?)

First, people are not spending, not because they are "holding onto their money," as this thing implies--there has been a clearly established "negative savings rate," that is, people are in debt and do not have the money to pay things off, for several years now, from Labor Dept. and other official Government statistics. They are not spending because they do not have any disposable income.

You can tell this is a happy-happy-story lie, because there are statements that are just not true: "Conditions are beginning to improve," it claims, then claims that there is a "recent runup in the stock market and signs of stabilization in real estate prices"--both of which are false. The stock market (as it did during the Depression of the 1930s) has been going up and down, and is down again; and true home values are plummeting, foreclosures up. Prices of new homes were up for a little while recently, and sales are flat and going down! There are no "signs" of "recovery" anywhere.

As a matter of fact, an economy geared toward rich people and their spending is the surest sign that this is a really bad recession, and is worsening. If the true foundation of an economy--the vast middle class--is not there to sustain economic growth with its ordinary activity of purchases, then it has collapsed. Rich people do not increase their spending because they have been given tax cuts, bailouts, or anything else, because they did not lack anything they needed; you only get recovery from middle class and poor people getting welfare-type direct-cash payments, which they then use. Economies do not recover because rich people "invest" or buy stocks. Economies recover when they are driven by the purchasing of the middle class, not rich people.

Of course, the real clue is that all of this valuable information is being gotten from "the Luxury Institute, a consulting firm." Right, if I want real standard-of-living statistics, I go to "the Luxury Institute, a consulting firm." The surest sign of recession or depression is exactly that only rich people are spending, only luxury items sell, and only the stock market--occassionally--and corporate profits are up. This is what we have here.

From the excerpt: "Already, wealthy shoppers say they are cutting back less and don't worry about money as much as other demographic groups, according to a recent Gallup report." Fuck you, too.

[Hannah Bell]

20. They had to do a poll to figure out: "wealthy shoppers don't worry

about money as much as other demographic groups"?

genius.

[Tierra_y_Libertad]

19. A recovery without jobs isn't a recovery, it's a recipe for cheaper labor.

Which is what happens when there's high unemployment and people will take what's offered for any job.

And, it's not going to change for a very long time, if ever.