Michael Aumock, HNWI expert and vice president of ViaMari, gives an optimistic account of how the affluent will help the economy to pick up steam in 2010.
Michael Aumock, HNWI expert and vice president of ViaMari, gives an optimistic account of how the affluent will help the economy to pick up steam in 2010.
It’s OK to breathe a sigh of relief, but don’t get too excited just yet; I don’t think we’re racing toward another boom like the one that just fell on our heads again anytime soon (unless a new technology arises that revolutionizes travel, like teleportation). But I do think that the worst is behind us.
That is not to say that it will be an easy climb out of the muck and mire we have collectively been forced to square dance in for the last 18 months. But rather, it will be “two steps forward, one step back” for the foreseeable future. There are too many uncertainties for an unencumbered rebound to simply show up and take wing. For one, banks still are being extremely tight-fisted, and perhaps, rightly so. Would you want to be the president of a bank who made a loan TODAY that defaulted? Me either. Additionally, the housing market us still trying to find its footing. Conflicting reports coming from the media present a patchwork quilt of view of the real estate market…in some places it’s up a little…and it some places it is still sliding a little. But there is good news in that patchwork; the places that were sliding have slowed their slide, and the places that saw the smallest dips, have seen an increase that is bound to be contagious, and start to increase lending on the mortgage side.
Wishing will make it so.
We’ve been in a cycle of self-fulfilling prophecies where the economy is concerned. When the collective consciousness of a nation becomes engrossed in an idea, that idea becomes reality. In the beginning of ’08, the scent of the crash was in the air. If the wind blew just right, you could smell it. You had to know what it was, because to most of us, it was an unfamiliar odor. It smelled faintly of leftovers, hand-me-downs and Grandma’s attic. Boomers who lived through plenty recessions over the last half century were constantly reminded of their parents’ tales of The Great Depression. We knew what was afoot.
By mid-08, when the market really tanked, investors were all doom and gloom….and rightfully so. However, when Joe Lunchbucket started feeling the pinch, the country fell into a malaise that at times, was palpable. The malaise turned to fear, and the people of America did two things: First, they froze; and then, they started pointing fingers. Most of us should have been pointing in the mirror. The effect was absolutely chilling on the country and most importantly, on High Net Worth Individuals (HNWIs), most of whom are baby boomers. The public sentiment might not have been “kill the rich”.
As lavish spending—justified or not—became a huge taboo, HNWIs did exactly what the economy didn’t need…they sat on their hands, and their checkbooks, and did nothing. After all, they had enough things to last a lifetime…so they went once around the sun without spending any real dough, adopting a new saying, “We’ll wait for 2010…the economy will surely pick up by THEN.”
So what does that mean for the luxury segment?
So now, with a new decade upon us and no glaring indicators to signal whether it’s time or not, some economists, myself included, believe that the HNWI segment will start spending again, simply because, a year ago, they put a moratorium on spending and that year has come and gone. By and large, they will feel like they did their penance. They still have disposable income, and in ’10 they won’t be afraid to use it.
One year was enough.
And so, it’s time to call the travel agent, or Quintess.
Email the Porsche dealer and check out the new Panamera. Drop by the watch store and try on a new Panerai or Patek, or take the new Sunseeker 37 Meter out for a sea trial.
Although I don’t think it will be enough to get the economy moving quickly, it will be a start. Money will start to flow again, slowly at first, but picking up speed with every week that passes. And most importantly, the positive trickle-down won’t just be economical…but it will echo through hearts at all levels of the economy and the malaise will fade, but it is doubtful it will soon be forgotten.
Michael Aumock, Vice President of ViaMari
