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WHAT OTHERS SAY: Recession? Where? Luxury brands are thriving

Thursday, August 11, 2011 | 5:02 p.m. CDT

With unemployment mired in the low 9s, governments grinding in low gear in deep partisan mud and the stock market lurching around like the neighborhood drunk, we find ourselves worrying about — Tiffany's.

And BMW and Porsche. And Christian Louboutin thigh-high suede boots at $2,495 a pair and Crème de la Mer face cream at $1,650 a pound.

It turns out that luxury goods have been recovering quite nicely from the recession, according to The New York Times, enjoying 10 straight months of higher sales figures compared with the previous year.

For decades, high-income consumers spent boatloads of money on high-end goods (including boats), but even they had to cut back after reality caught up with the reckless financial industry and the world economy tanked in 2007-08.

"That was key to why we suffered such a bad recession," Mark Zandi, chief economist of Moody's Analytics told The Times last week. "Their spending fell very sharply."

So for the sake of the economy and, especially, for the men and women working the selling floors of luxury retailers and the showrooms and service departments of expensive automobile brands, we all should hope that the latest spasms of the stock market don't scare upscale Americans into tucking away their Amex black cards.

At the same time, we can't help noticing how far removed a Mercedes S-class sedan is — for gas savings, consider the S400 Hybrid, starting at $91,000 — from Americans who don't know if they'll have a job next week.

We think about families who have no option but to keep squeezing miles out of aging cars that are just a paycheck away from being unfixable — AAA (the auto association) reported this week that a quarter of all Americans couldn't afford a $2,000 car repair bill if they were faced with it.

We imagine couples now living on one income instead of two, worried about meeting the payments of adjustable-rate mortgages. We know middle-aged, middle-class parents who've lived modestly and saved responsibly and wonder from semester to semester if there will still be federal Pell grants and subsidized loans to allow their kids to stay in college.

In darker moments, we even remember seniors who were so afraid of unpayable electric bills that they perished in brutal heat and humidity, rather than turn on their air conditioners.

In the greatest nation on Earth, more than 17 percent of our people live in poverty, a rate that has been increasing for 30 years. Its poverty rate puts America fourth from the bottom among the 34 developed nations that make up the 50-year-old Organization for Economic Cooperation and Development. Only Chile, Israel and Mexico are worse.

Equally dismaying is the withering away of America's middle class as the country increasingly finds itself divided into camps of rich and poor. Among OECD's member nations, the United States ranks 31st out of 34 in measures of income inequality, worse than all other countries except Turkey, Mexico and Chile.

Tiffany shoppers and Porsche drivers matched against poverty rates and income equality? What is this, class warfare?

As one of the wealthiest individuals on the planet, Warren Buffett, likes to put it, "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning."

Copyright St. Louis Post-Dispatch. Reprinted with permission.

 

 


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