Sales Of High-End Goods Soar Amid Economic Uncertainty
PALO ALTO (CBS 5) - A recent Wall St. selloff has some traders fearing a double-dip recession. That perception may scare off many would-be shoppers, but not those who can afford luxury goods.
High-end retailers like Tiffany & Co. and Saks Fifth Avenue have remained a bastion of strength in recent months. They benefited from a stock rally that started a year ago and made wealthy households even wealthier and willing to spend.
The sale of luxury items is a key component of the United States economy, and all seems to be well in Palo Alto, where the median household income is over $130,000-a-year.
Rebeca Lee manages Cielo, a retailer that sells designer clothes, including shirts carrying a $700 price tag. She said the current economic sag hasn't hurt her store.
"We got a dip about two years ago, but now things are picking back up," said Lee.
One industry tracking firm reported that high-end sales fell about 18-percent at the peak of the recession in 2008, but stores are now stocking up and selling goods at full price once again.
"I just went shopping earlier and bought a new dress that I didn't need," said shopper Carrie Leontis, who added that it feels good to do her part to keep the economy strong.
MasterCard Advisors SpendingPulse said its index of luxury sales at restaurants, food boutiques, department stores and clothier, surged 12 percent last month.
The luxury auto industry is also doing well. BMW reported that it doubled its quarterly profit, and that sales are up nearly 17 percent. Mercedes Benz and Porsche have reported similar strength.
"I think it is my patriotic duty to go shopping right now," joked Palo Alto shopper Kristin Gilliss.
If the recession does return, carrying out that duty may get more difficult.
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