The rich may not be quite so different than you and me these days: They, too, have less money.
Their fortunes have fallen along with the prices of stocks, oil and real estate.
Luxury condos on Florida beaches languish; champagne sales are down; private jets sit idle.
Times may be tough for the wealthy, but they're tougher for those who serve and sell to them.
"Business may be a bit off this year," allows Doug Turner, president of Millionaire's Concierge in Fort Lauderdale, which offers everything from VIP concert tickets to $13,000 rides in fighter jets for the wealthy. The rich are cutting non-essential items, and that hurts his business. "Everything I sell, you don't need," he says.
Just what defines "wealthy" is subject to debate. The Securities and Exchange Commission defines a high-net-worth person as someone with $750,000 or more in investible assets. Under President Obama's tax plan, people earning $250,000 or more annually are wealthy enough to get a tax increase — and those people are in the top 2% to 5% of all income levels.
By most accounts, the wealthy have done well. Those in the top 10% of income have seen their income rise 34% after inflation since 1979, according to the Federal Reserve, vs. 4% for those in the bottom 10%. Their gains have spawned thousands of businesses whose employees pamper, prop up and please the very rich. Those workers are the builders of the vacation condos, the delivery drivers of champagne, the pilots of private jets.
And while the luxury industry isn't anywhere near as big as the market for everyone else, it's still a significant part of the economy (1.2 million luxury cars sold last year alone) — and one that won't recover until the recession is well over.
Make no mistake: The recession is easier to bear if you have a few million in your wallet.
And people with a great deal of money are still going to spend it. For example, the Ritz-Carlton hotel in Washington, D.C., offered a four-night package that included two tickets to the Inaugural Parade, two tickets to an Inaugural Ball and Gucci luggage. A well-heeled President Obama supporter paid $12,000 a night for it.
Nevertheless, the wealthy are cutting back. Bentley, the British automaker, says sales are down 32% in North America. And a 1947 Matisse cutout at auction at Christie's in December went without a single bid.
"It's conspicuous non-consumption," says David Wyss, chief economist for Standard & Poor's.
And retailers who cater to the wealthy are slashing prices. In tony department stores such as Bergdorf Goodman during Christmas, shoppers could find handbags marked down 40% or more. Big chains such as Saks Fifth Avenue and Bloomingdale's were chopping prices 50% or more.
"It was unbelievable," says Faith Hope Consolo, chairman of the Prudential Douglas Elliman Real Estate's retail sales and leasing division. "Luxury never had sales before Christmas before."
They had little choice. For retailers, inventory is a wasting asset: No one wants winter clothes on the rack in the spring. But many luxury retailers are finding that shoppers are still cutting back.