Gatsby-Style U.S. Weddings Show Confidence to Spend: Economy
Lauren O’Shaughnessy has boosted prices for her wedding-planning services by about 25 percent since 2009 as the economic expansion puts Americans in the mood for bigger parties and fancier locations.
Spending on the average wedding in the U.S. climbed 5.2 percent to $28,427 in 2012 from a year earlier, according to XO Group Inc. (XOXO), a New York-based company whose websites include theknot.com and WeddingChannel.com.
“People do feel more comfortable spending their money than they used to,” said O’Shaughnessy, a 29-year-old partner at Bellafare LLC, an event and wedding-planning company in New York. “We’re busier, the stuff we’re getting is much more grand, and we’ve had to hire more people to help us out with everything.”
Further strides in employment, record household wealth from rising home and stock prices, and consumer confidence at a five-year high will help sustain such discretionary spending gains. More lavish special events, from weddings to bar mitzvahs, have sparked stepped-up hiring in the leisure and hospitality industry and kept the bubbly flowing for companies such as Martha Stewart Living Omnimedia Inc. (MSO) and Signet Jewelers Ltd. (SIG)
“There are those who, as the economy returns and improves, are ready and willing and anxious and excited to spend more and to maximize the celebration of the biggest day of their life,” said Brian Beitler, executive vice president of Conshohocken, Pennsylvania-based David’s Bridal Inc., the U.S. largest wedding-gown retailer.
Rising property and stock values are boosting consumer finances, helping Americans cope with higher payroll taxes. Household wealth jumped to an all-time high in the first quarter, exceeding its pre-recession peak for the first time, the Federal Reserve said on June 6. Net worth for households and non-profit groups increased by $3 trillion, or 4.5 percent from the previous three months, to $70.3 trillion, the Fed said.
Demand for new homes helped propel confidence among U.S. homebuilders to the highest level in seven years in June, according to the National Association of Home Builders/Wells Fargo index of builder sentiment released today. In Asia, a report today showed Singapore’s exports fell more than economists estimated in May, adding to signs of a regional slowdown. Stocks in the U.S. rose, rebounding from last week’s decline, with the Standard & Poor’s 500 Index advancing 1 percent to 1642.6 as of 10:21 a.m. in New York.
A report last week showed sales at retailers rose more than forecast in May, indicating consumers will help propel the world’s largest economy past a second-quarter slowdown. Purchases increased 0.6 percent, the most in three months, the Commerce Department said.
“There are some indicators that consumers are finding their stride,” said Josh Holland, a spokesman for Blue Nile Inc. (NILE), an online retailer of diamonds and fine jewelry. The Seattle, Washington-based company, founded in 1999, estimates it sells half of all U.S. engagement rings purchased over the Internet. “More people bought a Blue Nile diamond engagement ring in the first quarter of 2013 than in any other first quarter in our history.”
Signet Jewelers, which sells engagement and wedding rings under Kay and Jared brands, reported an 8.1 percent increase in same-store sales in the U.S. for the 13 weeks ended May 4. Last year, the company recorded a 1.2 percent increase in the comparable period. Investors have been rewarded with a 23 percent increase in Signet shares in the six months through June 14, compared with a 14 percent gain for the S&P 500.
New York-based Martha Stewart Living said advertising revenue from its Weddings magazine rose 6 percent in the first quarter, and it’s “encouraged” by the levels seen in April, according to comments by Chief Financial Officer Kenneth P. West during an April 30 conference call with analysts.
Stronger demand is allowing companies to raise prices. The average cost of a wedding dress climbed to $1,211 last year from $1,121 in 2011 and $1,099 in 2010, according to XO Group.
Hollywood is playing a role too. Some couples are inspired by the Roaring Twenties style of opulent parties, rich diets, slinky knee-length dresses, champagne and diamonds, as pictured in “The Great Gatsby,” a 3-D movie released earlier this year that stars Leonardo DiCaprio.
“We also see, with pop culture, the release of The Great Gatsby, a revival of looking to things that are nostalgic,” Beitler said in a phone interview. “There’s been a focus on vintage-style dresses. Lace has been a very large and growing trend.”
The average cost of a wedding last year rose more in New York and Houston than anywhere else in the U.S., climbing 16.5 percent from 2011, according to a survey by The Knot. In Manhattan, weddings averaged $76,687 in 2012, while in Houston couples paid almost $32,000.
The increase in wedding budgets marks a turnaround from the recession, when the number of people getting married dropped to 6.8 per 1,000 population in 2009 from 7.3 two years earlier, and the rate of household formation declined.
While the marriage rate remained at 6.8 in 2011, the latest figures available, more recent data suggests more young people are making up households.
Among adults 34 or younger, 37 out of 100 were heading a household last year, up from 36.7 in 2011 and the first increase since 2005, according to Pew Research Center analysis of data from the U.S. Census Bureau and the Labor Department.
“Economists are interested in household formation as well as marriage trends, for what it means for home-buying, and all these expenditures that come with home-buying,” said Richard Fry, a senior economist with the Pew Research Center’s Social & Demographic Trends project in Washington. “When you buy a home, it’s not just a home, there is a whole bunch of consumer durables that are associated with it. You’ve got to equip the home.”
The increase in event spending goes beyond weddings, to other family celebrations, such as bar mitzvahs and bat mitzvahs, according to Cigall Goldman, a 35-year old founder of Mazelmoments.com, a website for planning Jewish events.
Glenn Sherman, a 58-year old cantor at Century Pines Jewish Center in Pembroke Pines, Florida, was hired by a family from the suburbs of Albany, New York, to perform a rain forest-themed bar mitzvah in Costa Rica. Last week, he was in Cancun.
Americans have “definitely more money to spend on these events,” he said. “I am booking a bar mitzvah in Hawaii for next year.”
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