You Paid How Much for That Present?Joel Stonington
For a few years it looked like the days of reckless extravagance had ended. The yachts were smaller, the diamonds a little dimmer. Luxury seemed less luxurious—but for many one-percenters, the global economic downturn was no more scary than flying through an air pocket in their G5s.
Ostentatious spending is making a comeback. This year, a Russian tycoon bought the most expensive home ever sold in the U.S., the auction world welcomed the return of record-breaking sales, such as that of a bleak landscape photograph by Andreas Gursky for $4.3 million, and just this month, a British businessman took a spoon to the most expensive dessert ever, a $34,400 mélange of chocolate and champagne caviar topped with a gum-skinning two-carat diamond, according to the U.K.’s Daily Mail.
The 2008 financial crisis sparked popular anger about wealth and pushed the debate on income inequality into the spotlight. The moment that luxury went into hiding was likely back when Representative Henry Waxman (D-Calif.), during a 2008 congressional hearing, shamed Lehman Brothers’ chief executive, Richard Fuld, about his painting collection, oceanfront home, and millions in compensation.
The sale of luxury goods dipped in the recession, and the idea of luxury shame entered the cultural lexicon. That didn’t mean that spending on high-end luxury stopped. Instead of obvious limousines, for example, some in the top income brackets have turned the Mercedes-Benz Sprinter into the customizable elite vehicle du jour, according to the New York Times. The base sticker is $41,315, but to trick it out properly, figure on putting up at least a hundred grand.
As the economy has begun a slow recovery, sales of luxury goods have rebounded. Bain & Co. released a report earlier this year that projected eight percent growth in luxury items in 2011, followed by continued growth of five percent to six percent per year.
“We can’t live with that level of anxiety or discomfort for too long,” says media expert and author Michael Levine. “So I think that luxury shame has in some part dissipated, but not fully.”
The enduring image of the return of luxury is a group of stockbrokers who gave a champagne toast on a balcony near Zuccotti Park, former home of the Occupy Wall Street encampment, in September. That doesn’t mean the debate is dead.
“People are losing homes and unable to pay [for] health care, while others are buying Prada bags and eating caviar,” says Jesse LaGreca, 32, a protester. “It speaks to the lack of values in our country. I get the feeling that there are some people who would rather spit champagne on you than offer you a helping hand.”
It’s all buoyed by the super-wealthy. Spending among those with discretionary incomes of $100,000 to $250,000 is expected to drop 17 percent this holiday season, while those with incomes of more than $250,000 are expected to spend 7 percent more, according to the 2011 Survey of Affluence & Wealth in America Holiday Forecast by American Express Publishing and Harrison Group.
“There remains a real conservative tone, and people talk an awful lot about what they are saving more than they are talking about their latest car or their latest possession,” says Dr. Jim Taylor, vice-chairman of Harrison Group. “It remains a conservative market. As far as shame or guilt is concerned, that’s mostly gone.”
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