The cost of living it up is starting to take a toll. Upper end consumers are starting to exhibit the same consumption cutbacks as those of us who routinely shop at Walmart.
Merrill Lynch economist David Rosenberg has examined the spending and consuming habits of his colleagues and clients on Wall Street and has created his own "Wall Street core inflation index," which tracks the rise in prices of the necessities of yuppie life: "jewelry, spas, lawn care, health care, sporting goods, housekeeping services, tuition, airlines, hotels, salons, legal/financial services, and dry cleaning." His conclusion: The price of spoiling yourself rotten is rising rapidly. "The Wall Street core CPI is running at 4%, nearly double what it is for Main Street," he wrote in a report on July 28.
In other words, forget about the heat and the Frappuccinos. Sales at Starbucks and its sister high-end retailers may be faltering because the cost of living well is rising more rapidly than the overall cost of living. [More]
The picture of the US as "hollowed out" from a disappearing middle class seems to resonate for many. I think one indicator of the divide may be a nascent desire to more discrete consumption via the Internet on the part of the rich.
In other words, the Two Americas may be falling into step. (Permission granted to gloat quietly)
And it looks like we're walking downhill.