Soft Retail Sales Predicted by Latest AARC Survey

Latest semi-annual survey shows that even the most wealthy families have cut back their discretionary spending and that future spending cuts for many products and services can be expected.

PINECREST, Fla. - April 21, 2003 - (PR Web) Continued softness in retail sales over the next 12 months is indicated by a new survey of men and women in households that are among the wealthiest 10% in the country. These 10 million households earn one-third of the personal income and hold two-thirds of the personal wealth of all Americans.

The survey, conducted by the American Affluence Research Center, shows that not only have the wealthy already curtailed spending, additional cuts can be expected. To track changes in future spending and the economic outlook of the wealthy for the next 12 months, three Affluent Consumer Expectation (ACE") indexes were compiled from the survey data.

The ACE index for future spending on durables for the home (including computers, furniture, appliances, and electronics) is negative and eight points below where it was one year ago. The ACE index for future leisure spending (including recreational activities, entertainment, upscale dining, and casual dining) is also negative and down 10 points from last year. The index for spending on apparel is also negative.

Plans for large purchases such as homes, automobiles, boats, home remodeling, and cruises appear to be holding steady. Expenditures for domestic vacation travel are expected to rise slightly, while international vacation travel spending will decline even further.

Despite the anticipated spending reductions, the ACE index for the future of business conditions, the stock market, and household income, was higher than it was six months ago (129 vs.118), but below where it was one year ago (139).

The 3-year stock market decline has affected the financial plans of even the wealthiest Americans, the survey showed. Non-essential purchases have been deferred, retirement schedules have been revised, new income sources are being sought, and financial assets have been reallocated. Twelve months ago, the primary investment objective of the affluent was capital appreciation. Today there is a balance between growth and capital preservation.

Surveys of affluent Americans are conducted semi-annually by the AARC. This survey, completed in early April, has a margin of error of five percentage points. All survey respondents had a net worth of at least $500,000. Average household income was $268,000 and average net worth was $2.5 million, with investable assets averaging $1.1 million.

For additional information or to order the complete 25-page report (available for $295) call 305-666-0476 or visit www.affluenceresearch.org.