It's not a recession until the rich say it's a recession.
And the rich now say it's a recession.
The American Express Publishing Corp. and Harrison Group recently surveyed 638 well-to-do households, representing the wealthiest 10 percent of Americans. These 12 million households account for half of all U.S. retail spending and $4.1 trillion worth of consumption.
More than 90 percent of them indicated they believe the U.S. economy is in a recession or on the precipice of one.
"They are as down on the economy as you can imagine," said Jim Taylor, vice chairman of Harrison Group, which co-produces "The Annual Survey of Affluence and Wealth in America."
Here's what they said:
• "I think we are in for a long rough ride ahead," 73 percent.
• "My company is looking at cutting costs and could be letting people go," 48 percent.
• "I am looking closely at every spending category to see where we can save," 68 percent.
• "I usually wait for something to go on sale before I buy it," 82 percent.
High-end retailers are already feeling their well-heeled customers' pain. Last week, Nordstrom reported a 24 percent decline in first-quarter profit. And Whole Foods stock fell more than 12 percent after the company reporting a 13 percent decline in first-quarter profit.
Sales of luxury cars are down, and even some million-dollar homes are falling into foreclosure.
New consumer confidence numbers, reported Friday, show consumers
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at all levels are the sourest they've been in 28 years.
Falling real estate values, soaring gasoline prices, a flat stock market and tightening credit have taken such a toll we look back to an era of stagflation for comparisons.
Warren Buffett has said he believes we're in a recession.
Billionaire trader George Soros has said he believes we're in the middle of a popping "super-bubble" that has been building for the past quarter century.
"I consider this the biggest financial crisis of my lifetime," Soros told the New York Times last month.
When the rich feel pinched, they begin to manage risks more carefully, investing less in ideas that might actually create jobs and reinvigorate the economy.
"We're entering a period of serious risk management," said Taylor. "It's a very problematic sign."
When it comes to pinpointing the causes of the recession, the rich are no different than you and me. Here's what they said in the survey:
• "The real cause of this recession is the free and easy availability of debt in America," 81 percent.
• "Big banks and corporations have again put the whole economy at risk," 69 percent.
• "Poor leadership in Washington has brought about this recession," 68 percent.
• "I am concerned that America is becoming a second-class economy," 67 percent.
Perhaps this is a sign things have finally hit bottom and will start to turn around. Surely, we can't expect first-class people to live in a second-class economy.
