Economy Getting Boost from Country's Biggest Spenders, Survey Shows

PINECREST, Fla.--Oct. 2, 20033, 2003--The economic recovery now underway will get a further boost from increased spending by the primary beneficiaries of both the recent tax cuts and the rise in the stock market, according to the latest semi-annual Survey of Affluent Americans(TM) conducted by the American Affluence Research Center.

The October survey shows that the affluent have become more bullish about business conditions, the stock market, their own household income, and their ability to save and invest. The composite 12-Month Economic Outlook Index for these indicators increased from a moderately optimistic 129 six months ago to a more upbeat 141.

The survey focused on the wealthiest 10% of all U.S. households. With incomes averaging $270,000, these 11 million households earn 40% of the total income of all Americans. Their net worth averages $2.7 million and they hold 85% of the total value of all publicly traded stock and stock mutual funds.

The survey shows that the country's biggest spenders now expect to spend even more. Over the next 12 months, the top-10% expect to purchase approximately 4 million motor vehicles (about 25% of all cars and light trucks sold); 800,000 new homes (accounting for 40% of all housing starts); over 1 million existing homes (15% of all existing home sales); and 2.8 million cruises (one-third of the total).

Spending for domestic vacation travel, entertainment, recreation, and casual dining-out is also expected to increase in the next 12 months. However, spending for collectibles, upscale dining, and personal luxury items is expected to drop.

Investment strategies are also changing. Six months ago, as many of the affluent invested for growth as for capital preservation. Today, more than twice as many invest for growth.

Despite the increased optimism, the 32% who feel they are financially more secure today than 24 months ago only slightly exceeds the 31% who feel less secure. It is only among the very wealthiest that those who feel more secure substantially outnumber those who feel less secure.

The survey also shows BMW, Lexus, Mercedes-Benz, Rolex, and Sony to be the brands most frequently named as representing "the very highest quality". Costco, Home Depot, Nordstrom, Target, and Wal-Mart were the most frequently named retail outlets that offer the best combination of products, pricing, and service.

In the past 12 months, 84% of the survey participants used the internet to buy products or services, or to conduct research before making a purchase. Most likely internet purchases included non-business airline travel and lodging, computers, stocks, and non-designer apparel.

This survey has a maximum margin of error of five percentage points.

The complete 35-page report is available for $295 from AARC and may be ordered by contacting the company at 305-666-0476 or info@affluenceresearch.org.

The AARC is a marketing research company that focuses on the values, lifestyles, attitudes, and purchasing behavior of the most affluent segments of the population.