Wall Street bankers hiring a dwarf for an over-the-top bachelor party in Miami. Nieman Marcus selling out its 100 limited-edition $75,000 Camaros in three minutes. Socialites dropping $40,000 on a custom cellphone at a jewelry store in Chicago. An investment analyst at Goldman Sachs who hired hip-hop queen Lil' Kim to perform for 1,000 guests at his annual Halloween party last month.
What is this -- 2006?
Though the unemployment rate remains near 10 percent with millions of Americans about to run out of their jobless benefits, one in five Americans are using food stamps to buy groceries and small businesses are being forced to slash their work forces to stay alive, Wall Street's top bankers and wealthy investors are spending to excess, indulging their every whim.
Consumer spending amounts to more than two-thirds of the American economy, so this return to frivolity at the top is-- at least in theory--supposed to trickle down to less fortunate areas of life. But trickle down is one of those phrases that has yet to break out of the conceptual realm. Despite the mad rush back to the steakhouses, the high-end department stores and the jewelers, very few ordinary people seem to have gotten any work as a result.
The New York Times reports:
Two years after the onset of the financial crisis, the stock market is recovering and Wall Street's moneyed elite are breathing easier again. And this means in some cases they are spending again -- at times cautiously, but sometimes with a familiar swagger.
They're doing that, knowing that the biggest firms on the Street -- Goldman, Morgan Stanley, Citigroup, Bank of America and JPMorgan have set aside $89.54 billion to pay their employees. Bonuses on Wall Street are expected to increase up to 15 percent, according to data from a report by Johnson Associates, a consulting firm.
And all of that spending is good for luxury retailers and services, from steak houses and plastic surgeons to real estate agents in the Hamptons and high-end jewelers.
"The aspirational shopper has been murdered; the mainstream shopper has problems," says Howard Davidowitz, a New York-based luxury retail consultant and investment banker told Crain's Chicago Business. "But the Saks shopper? The Neiman's shopper? As long as the capital markets continue to perform, sales will be tremendous."
Indeed, luxury jeweler Tiffany reported this morning that its quarterly results beat expectations -- global sales at stores open at least a year rose 7 percent.
"Luxury spending has rebounded as the affluent have recovered from the recession faster than others as the stock market rebounds," reports the Wall Street Journal
Over all, luxury stores saw improved results, reports Crain's. Neiman Marcus Group was up 9.5%, Saks Inc. saw an 8.1% boost and Nordstrom Inc.'s sales rose 3.4%. Sears doesn't release monthly sales figures, but mid-market rivals Kohl's Corp. dropped 2.5% and J. C. Penney Co. was down 1.9%.
Not that Wall Street wants that consumption to be overly conspicuous or decadent -- Morgan Stanley wasn't pleased when one of the firm's traders went a little over the top at a bachelor party, reports the Times. "A Morgan Stanley trader recently tried to hire a dwarf for a bachelor party in Miami, asking the dwarf to meet him at the airport in a "Men in Black" style suit, according to e-mail exchanges. The trader, who wanted to handcuff the dwarf to the bachelor, was recently fired."