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It seems as though the $40 main course is here to stay. According to one survey 66 percent of the wealthy plan on spending the same eating out this year.
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updated 6/4/2008 4:41:24 PM ET 2008-06-04T20:41:24

America's wealthiest citizens might not be feeling the pain of the slow economy in their back pockets, but that doesn't mean they haven't altered their spending habits.

More than a few upper-class Americans are cutting back on spending, even if it's just a little, according to a March 2008 survey conducted by Alpharetta, Ga.-based market-research firm the American Affluence Research Center.

In fact, 55 percent of the 5,000 wealthy men and women surveyed said that they had reduced or deferred expenditures in the past 12 months or would make a conscious effort to do so in the next 12 months.

Those who partook in the survey — which was the 13th of its kind, conducted twice a year by the AARC — represent the 11.2 million households that make up the wealthiest 10 percent of the U.S. population, as determined by the Federal Reserve Board. The average annual household income of those surveyed was $315,600, with an average primary residence value of $1.2 million, average net worth of $3.1 million and average assets of $1.5 million.

Ron Kurtz, founder of the AARC, says that in the seven years he's been conducting this survey, high-net-worth consumers have never felt so dismal about the economy.

"Even in 2002 and 2003, when there was a bit of a downturn, people were much more optimistic [than they are now]," he says. Historic numbers on Kurtz's Affluent Consumer Expectations economic index — which measures the attitudes of those surveyed regarding future business conditions — is at 99 for Spring 2008, 32 points lower than Fall 2002. "There are more fundamental problems in the economy right now, including a soft dollar and major overhang of the housing market."

The fundamental difference between the rich and not-so-rich is that cutbacks for the former are generally voluntary, not mandatory. Chances are, those among the wealthiest 10 percent of the U.S. population weren't directly affected by the subprime crisis, for example. That doesn't mean they're spending like crazy during the downturn, but they're not slowing down all that much, either.

"We’re finding 'cutting back' to be a relative term," says James Chung, president of Reach Advisors, a marketing strategy and research firm focused on the wealthiest half-percent of Americans. "The stuff wealthy consumers view as non-essential is getting cut out entirely. Areas that the wealthy consumer views as necessities in their life aren’t getting cut back."

What do wealthy folks deem necessary? Travel, for one. In the American Affluence Research Center's survey, 61 percent of participants said they plan to spend the same amount of money on travel around the States as they did last year, and 26 percent plan to spend more. "If they are cutting back, it's on the number of days traveling and daily expenditures, not the quality of hotel or timeshare," says Kurtz.

High art also seems to be immune from the downturn. Hicham Aboutaam, head of Phoenix Ancient Art, an antiquities dealer with locations in Geneva and New York, says that only lower-quality, less-in-demand pieces will suffer. That explains the record prices at prominent auction houses within the last 12 months, including Francis Bacon's "Triptych" painting for $86 million at Sotheby's and Lucian Freud's "Benefits Supervisor Sleeping" at Christie's, both sold in May 2008.

"There is no clear correlation between what's happening in Wall Street and collecting art, except in the lower end," says Aboutaam. "High art, like the top percent of real estate, will continue to rise in price."

The same goes for fashion. While some European design houses are feeling the pinch of the weak dollar — Gucci saw sales drop 3.3 percent in the first quarter of 2008 — others are seeing an increase in demand for their bespoke (read: more expensive) offerings. Chanel reported that 2007 was its best year ever for couture. And Hermès, maker of the $8,000-plus Birkin bag, reported a third-quarter sales increase of 13.4 percent to 415 million euros ($639 million) from the same period in 2007.

Kathleen Beckett, a fashion writer and personal shopper, says that her clients are still buying. "It's not like someone who ordered $30,000 worth of clothes last year has cut it down to $15,000," says Beckett. "People are terribly concerned for [those] who aren't as lucky as they are, but that doesn't mean they're not spending."

Maybe those who can afford it are still indulging in designer duds, but when it comes to cars and home upgrades, they're playing it cool. For now, anyway.

Only 27 percent of participants in the AARC survey with a net worth of $6 million or more said they plan to purchase or lease a new vehicle in the next year. And that number decreases as net worth decreases. In the $1.5 million to $5.9 million category, 23 percent plan to get a new set of wheels, while only 16 percent in the $800,000 to $1.4 million range said they were headed to the dealership. And just 21 percent of those with a net worth of $800,000 or more plan to upgrade their homes in 2008, according to the AARC survey.

So maybe the rich do feel the pinch a little. But there's no reason to feel too sorry for them. "In reality, they are still plenty rich," says Chung. "But the backsliding is what has them cutting back."

© 2012 Forbes.com

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