View of Economy at Six-Year High Among Affluent in New Survey; Indicates Good Potential for Increased SpendingOctober 29th, 2013 by Editor
The assessment of current business conditions (index of 93) rose 22 points to neutral territory from the spring 2013 survey and is now 40 points above the fall 2012 index in a new survey by the American Affluence Research Center (AARC) of the wealthiest 10 percent of U.S. households that account for almost half of all consumer spending. This is the highest reading for this index since fall 2007 (108) and indicates good potential for increased spending by affluent and luxury consumers.
The index for future business conditions (105) and the index for change in the stock market (106) are both in positive territory. Ron Kurtz, president of the American Affluence Research Center observed that “the affluent have a modestly better outlook for the future than the general public.”
About 80 percent of the affluent expect their net worth to be the same or higher in the coming months while two-thirds expect their income to be the same or higher. Almost two-thirds say they do not plan to defer or reduce expenditures during the next 12 months, which represents an improvement of seven percentage points from spring 2013 survey.
Expectations regarding future income and net worth influence and/or correlate with planned changes in spending by the affluent for the 17 products and services tracked in these studies. For example, the average index for expected change in spending is 44 percent higher for those anticipating an increase or no change in their net worth versus those expecting a decline in net worth. The difference is 20 percent based on income expectations.
Some of the highlights of the special topics covered in this survey include: 89 percent of the women and 72 percent of the men expect to receive a holiday gift this year. The most popular items on the gift wish list are some form of “currency” (a gift card/certificate or money/check) among 47 percent of the women and 43 percent of the men.
Among the affluent households, the average expenditure for December holiday gifts in 2013 is estimated to be $2,175 (a decline of 2.8 percent from 2012). However, it appears the affluent households spent in 2012 almost 7 percent more than they had anticipated in the 2012 survey, supporting the premise that people often tend to spend more for gifts than they had planned.
The expenditure per affluent household for holiday gifts is about four times that of all households as estimated by the National Retail Federation, which has forecast a 3.9-percent increase in total retail holiday gift sales for this year.