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RAPAPORT... The Luxury Consumption Index (LCI), a propriety survey of the top 20 percent of wealthy U.S. households, plummeted to 46.4 points in October -- the lowest level since the great recession, according to Unity Marketing. And with such a drop in the economic sentiment of households with an average income of $259,000, Unity Marketing warned that affluents are not likely to spend extravagantly this Christmas season. Tom Bodenberg, Unity Marketing's economist, explained that even though the real estate market and the workforce participation rates appear to be stable, the affluent feel uncertainty about the economic front. This mood was particularly exacerbated with the mid-term election and its impact on equity and debt markets, which drive wealth and discretionary spending.
"Affluent consumers are sitting on the sidelines instead of getting in on the action. The chief culprit, which will factor into the holiday shopping season, is the volatility of the stock market, which accounts for current softness in the demand for luxury goods and services. It's safer on the sidelines," Bodenberg said. Pam Danziger, the president of Unity Marketing, said, "All five key questions that go into the calculation of the Luxury Consumption Index tanked in the latest survey. This sets up a bleak Christmas shopping season, since the affluent represent only 20 percent of U.S. households (24.5 million out of total 122.5 million), but account for more than 40 percent of all consumer spending."
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