Stimulus checks may not help luxury market
By Jeff Linville -- Furniture Today, May 26, 2008
Stevens, Pa. — The 2008 Economic Stimulus Package expected to jump-start the economy could end up having little effect on luxury spending, according to a new survey conducted by Unity Marketing.
Furniture stores often see a boost as consumers cash their income tax refunds, but for families with household incomes of $100,000 or more, the rebate is unlikely to spur many purchases, said Pam Danziger, president of Unity Marketing.
Only 11% of affluent consumers surveyed plan to use the rebate splurge on something special, she said, with more intending to pay down debt (27%), put it in savings (26%), spend it on routine household bills (21%), or invest it (16%).
Unity's latest survey was conducted April 7–11 among 1,258 luxury consumers with an average income of $173,400 and an average age of 46. Among those surveyed, about 60% expect to receive a rebate check.
"The affluent luxury consumers are the heavy lifters when it comes to consumer spending," said Danziger. "The top 20% of households based upon income — which corresponds to Unity's survey sample — spends about twice as much the typical U.S. household across the board. When they choose to hold back on their spending, the effects are felt far and wide."
Instead, she said, "A far more meaningful economic stimulus for the American economy would result from reducing the price of gasoline and improving the value of the dollar against foreign currencies."
It isn't all doom and gloom, however, Danziger said. She has seen an increase in people planning to spend on their homes. The more affluent consumers are holding onto properties, waiting for the market to improve, she said. They are investing in improvements like renovating the kitchen and bath, but once the house looks better, they want better furnishings, too, she added.
According to her surveys, affluent spending on furniture and accessories in the first quarter was up 10% from the fourth quarter of 2007.
