Luxury Spending on the Rise as Obama Calls out Fat-Cats

CNBC reports today that wealthy Americans are expected to increase their spending on luxury items by 8%, bringing the market to a total of $359 billion this year. David Arnold, publisher of Luxury Magazine tells the news men that the wealthy no longer harbor concerns about being stigmitized by flaunting their money at a time when the majority of the country is struggling. According to Arnold, “I think there was a moment certainly in 2009 when people felt that (embarassment), but in 2010 the luxury car market including Maserati, Lamborghini and Aston Martin saw growth of about 60 percent so that was a substantial increase after what was a fairly depressed market in 2009.”

Even as President Obama’s rhetoric has grown increasingly critical of the income gap between the rich and the poor in the United States, calling out corporate big wigs and jet-setters, Luxury Magazine’s exec says the wealthy in this country are not harboring any feelings of shame, in fact they’re a growing demographic. “The number of people with $30 million or more in investable assets grew by 10 percent last year. This group accounts for 36 percent of wealth globally. That’s a lot of wealth held by a small number of people…They continue to spend money, travel, buy planes, cars and jewelry. There certainly doesn’t seem to be any slowdown in their attitude or appetite for consumption”

Arnold continues, arguing that raising tax rates among the highest earning Americans is likely to prove ineffectual, and may actually stunt economic growth, “They are very good at avoiding taxes and that’s an issue…You look at a situation where someone purchases a luxury yacht and it keeps around 600 people employed for 9 months to a year depending on the scale of the yacht so there is definitely a knock-on effect.The unemployment issue in this country is substantial and there seems to be no end in sight. The luxury market employs hundreds of thousands of people globally and as people consume luxury goods they continue to hire experts and craftsmen.”

If Luxury Magazine’s projections are accurate, and wealthy Americans continue to spend heavily, expect these brand name luxury retailers to see substantial gains:

Saks Incorporated (NYSE:SKS), Tiffany & Co. (NYSE:TIF), Coach, Inc. (NYSE:COH), Nordstrom, Inc. (NYSE:JWN), and Polo Ralph Lauren Corporation (NYSE:RL).