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July 10, 2008 3:45 PM

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The Luxury Blues

When two guys on the Lexington Avenue IRT start griping about how it's taking upward of $100 to fill up their SUVs, you know there's something going on out there. But when such concerns start rattling the nerves of...

Oscar de la Renta

When two guys on the Lexington Avenue IRT start griping about how it's taking upward of $100 to fill up their SUVs, you know there's something going on out there. But when such concerns start rattling the nerves of Park Avenue millionaires, it prompts the question of exactly how far-reaching and long-lasting the growing threat to the country's prosperity might be.


Will wealthy Americans keep curtailing luxury spending into 2009, or will they be reaching back into the spending till, after a relatively brief pause? For how long can they resist the yacht charters, private jet miles and $200 Kobe beef burgers that not long ago would have been consumed at a whim?

A lot could be riding on perception, one of the engines that powers the stock portfolios of the elite. As Milton Pedraza, the Luxury Institute's chief executive officer told it, one well-heeled jeweler he knows has been thinking he'll start "feeling better" even if he winds up the year with a portfolio that's taken a 10 percent hit. After all, the jeweler reasoned, it's better than a 20 percent dent. At the moment, we're halfway between, with the S&P 500 down 15 percent for the year and the Dow off 16 percent.


It's hard to believe that people worth tens of millions would be shaken by a low double-digit downswing on Wall Street. But unlike America's first Gilded Age, the New Rich are self-made.


"Most grew up seeing their parents or grandparents struggle -- they're not old money," Pedraza noted. "They're conservative people who will cut back in difficult times. They're not Donald Trump."

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