They say you can never be too thin or too rich, but belt-tightening is sending a cold chill through Wall Street that could well spread to Main Street and beyond, according to various reports.
Luxury stocks may be taking a hit, but the recession hits home hardest for employees facing layoffs at Bank of America, Goldman Sachs, JP Morgan Chase and many other financial institutions that occupy Wall Street. If not facing unemployment, these and other employees and executives may be facing furloughs, salary reductions, slashed year-end bonuses along with uncertain financial footing.
That fear and uncertainty will surely cause many to trim traveling plans, modify shopping habits, and pay less attention to the $65 billion luxury retail market in the United States–and Reuters reports that New York alone spends a third of that on luxury goods, restaurants, travel and automobiles. Of course, the ripple will also be strongly felt in the luxury real estate market where demand for $2 million-and-up apartments has already softened in favor of those under a million.
CNBC reports relates the story of one bank executive who, fearing the possibility of a layoff, has very modest spending plans for any bonus he might receive this year, Meanwhile the Occupy Wall Street movement has put a damper on spending. According to Reuters:
Even those who are still getting big bonuses may hesitate to flaunt their wealth in New York this year given the Occupy Wall Street protests have been growing from a camp set up near the New York Stock Exchange. A number of finance industry leaders have said they understand the anger of the protesters, many of whom are concerned about a lack of jobs and growing income inequality.
Will the luxury gloom spread elsewhere in the United States? We’re watching it closely–and the shopping statistics should tell us much in the next two months.