Categorized | Etcetera

Tightening the belt…

Posted on 19 July 2010

The economic recovery¬†has been helped in large part by the spending of the most affluent. Now, even the rich appear to be tightening their belts. Late last year, the highest-income households started spending more confidently, while other consumers held back. But their confidence has since ebbed, according to retail sales reports and some economic analysis. “One of the reasons that the recovery has lost momentum is that high-end consumers have become more jittery and more cautions,” said Mark Zandi, chief economist for Moody’s Analytics.

At the high end, luxury hotel chains like Four Seasons and Ritz Carlton said bookings were much stronger earlier this year but had recently slowed.¬† To the extent that the wariness of the affluent is driven mainly by nerves and sentiment, economists hope that it will be temporary. “If growth is actually solid, those fears will dissipate,” said Dean Maki, chief U.S. economist at Barclays Capital and a former senior economist at the Federal Reserve Board.

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