Business | Economy

Confidence of wealthy dips in US

Confidence among US luxury consumers fell to the lowest level in at least four years, signalling a slowdown in spending in 2008, according to Unity Marketing, a research firm.

  • Bloomberg
  • Published: 00:22 January 29, 2008
  • Gulf News

Washington: Confidence among US luxury consumers fell to the lowest level in at least four years, signalling a slowdown in spending in 2008, according to Unity Marketing, a research firm.

Unity Marketing's Luxury Consumption Index fell almost 24 points, its biggest drop ever, to 63.6 for the fourth quarter, the Stevens, Pennsylvania-based luxury-market research firm said on Monday.

The measure stood at 87.3 in the third quarter, the previous low for the four-year-old index.

Market impact

Sentiment among wealthy consumers eroded as stock markets slumped, and the index's decline points to reduced spending for luxury goods this year, Unity Marketing President Pam Danziger said in an interview. "The index is predictive of what is going to happen," she said.

Spending by the typical wealthy consumer was little changed in the fourth quarter, at $12,159, compared with $12,142 in the previous three months, because of holiday shopping, Danziger said.

The figures include expenditures on luxury goods and services including fashion accessories, automobiles, and dining.

"At Christmas, people have to buy things, there is more reason to shop," Danziger said.

"When their stock portfolios go down, that's when the luxury consumers feel the pain."

The index is based on a mid-January survey of 1,300 consumers with an average income of $150,000. The measure uses a January 2004 base of 100.

Tiffany & Co, the biggest US luxury jeweller, has dropped 16 per cent this year. Luxury department-store chain Saks Inc. is down 18 per cent in 2008.

The 13-stock Bloomberg European Fashion Index rose 7.8 per cent on Monday and has fallen 17 per cent this year.

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