He makes a prediction in the book published in 2008.
The poor will carry on spending.
Yes the market may drop by 5 to 10% but so much of their spending power is on necessities it has to continue, even when financed by debt.
The affluent will carry on spending.
They’ve got so much spare cash that their consumption makes little dent in it. Do you think David and Victoria Beckham have cut back? Or even further up the pecking order, Bill Gates?
It is those who are stuck in the middle who will be most affected by recession by the recession. They have spare cash over above the money that have to be spent on living but…
They have a lifestyle to protect and worried about the future, they stop their discretionary expenditure and instead start saving, despite the meagre returns available on savings.
Even price cutting won’t tempt those in the middle back into the pre-recession buying frenzy.
What do you think?
It made a lot of sense when I read it although there is one issue I don’t agree with.
And that is the poor don’t just buy necessities narrowly defined as food, drink, utilities and property costs. There’s still an element of discretionary expenditure on things like plasma TVs and satellite TV subscriptions which is often financed through debt.
I wonder what has happened to that type of spending?