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Why Is The Consumption Of The Rich In America Rising And Falling?

2011/5/20 13:11:00 49

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With rich people starting to buy Bentley (Bentleys), Birkin bag and Francis Bacon's Bacons, luxury companies are cheering for the recovery.

Good days are back, even if the price is lower.

With the stock market rising and wealth surging, the recession seems to be a bad memory that is unlikely to happen very soon.

However, this kind of rebound still makes us feel puzzled about the disturbing fact of the consumption of the rich.

Consumption of the rich

It has become the most unstable part of the US economy.

Look at the chart below.

The red line represents Dow Jones.

Luxury goods

The index (Dow Jones Luxury Index) tracks the stock movements of 30 companies that make luxury goods or sell luxury goods to the rich.

The other line is Dow Jones Dow Jones U.S. Consumer Goods Total Stock Market Index.

That is to say, one is the Richistan Index, the other is the Main Street Index.

The volatility of the rich consumer index has always been ordinary people.

Consumption index

More than two times. During the boom period, the peak was much higher, and during the depression, it fell even more.

Of course, this is not surprising, because no one needs a Hermes scarf or Patek Philippe (Patek Philipe) watch.

Surprisingly, the volatility of the rich consumer index.

In a research report on the highest income group in the United States, economists Parke (Jonathan A. Parker) and Juergen Sen (Annette Vissing-Jorgensen) found that the consumption volatility of the 5% richest people in the United States was 2.5 times higher than that of ordinary families.

They wrote that high consumption families had a much larger drop in consumption during a severe recession.

Why?

Parke and Juergen Sen believe the reason is that the incomes of the rich are highly cyclical, and the IRS recently demonstrated this.

But there may also be psychological reasons, because the consumption of the rich has become more crazy.

They spend money like water in prosperity.

They enter control mode when they are depressed.