A few years ago, you might have shown your friends and neighbors that you were rich by wearing a Rolex Submariner or going for a drive in your Lamborghini Aventador.
Well, it's exactly 2022.
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In fact, the richest people in the United States are so wealthy that about 30% of the nation's wealth now belongs to just 1% of the population. In some ways, the pandemic has been a boon for the wealthy. A new millionaire was born every 30 hours. Real estate values across the country have skyrocketed, with the S&P 500 index up about 61% over the past five years.
Of course, the boom did not affect everyone equally. The average 30-year fixed mortgage is a whopping 7.9%, leaving many everyday consumers and prospective home buyers unable to take that important first step toward personal wealth.
Some economists were predicting a “wealth exodus,” or a recession that would primarily affect areas with high concentrations of wealth. For example, mass layoffs are impacting high-paying white-collar jobs. But investment and house prices suggest that the exodus of the wealthy is not in reality.
In fact, the rich just get richer. Some things never change. But their spending habits certainly are.
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The consumption habits of the wealthy are changing
Mark Zandi, chief economist at Moody's, said wealthy people are changing the way they spend their money. They're not cutting back on spending. They're just splurging on something different.
In fact, most of those things aren't anything at all. They are experiences. Rather than splurging on new cars (which are more expensive than ever), diamonds, or branded goods, they're buying access to services and memories.
“It's just a change in taste. They're doing something, so that's where the money is. They're going to see Taylor Swift for $2,000 a piece. They're buying Rolex watches. I’m not going to buy it,” Zandi said of the wealthy. We have “used up” goods and items and now exchange those purchases for intangible assets.
Luxury holiday bookings have increased 34% in the past six months, including experiences such as Arctic exploration, private tours of priceless artifacts and destinations, and extremely private enclaves that most people have never heard of. contained.
This is not surprising as most parts of the world have since reopened and the pent-up travel demand is impacting us all.
“Americans are the new Russians,” Jacques Ezon, founder of luxury travel company Embark Beyond, told the New York Post in June. “They are filling hotspots in the Mediterranean region at exorbitant prices and can’t seem to get enough.”
