- The United States is slowly beginning to reopen, but wealthy people still aren't spending as much money as they used to and it's causing the economy to tank.
- Nathan Hendren, a Harvard economist and co-founder of the Opportunity Insights research team, told NPR that this spending lag is likely to continue until there's a coronavirus vaccine.
- Many businesses based in Manhattan that cater primarily to the rich have temporarily relocated service to the Hamptons, where many wealthy people fled as the pandemic struck New York, in order to stay afloat.
- Visit Business Insider's homepage for more stories .
ADVERTISEMENT
The pandemic cut off the ultrawealthy from their favorite places to spend money — and their lagging spending, even as lockdowns lift, is hindering the economy's recovery
Chuck Savage / Getty Images
ADVERTISEMENT
America may be gradually reopening , but the ultra-rich still aren't dropping cash the way they always have.
NPR's Scott Horsley reports that wealthy people in the US aren't spending as much money, and it's having serious repercussions for the outlook of economic recovery.
Wealthy people typically spend their discretionary income on high-end restaurants and luxury vacations, or cultural activities like the theater and music festivals. Because the pandemic brought these industries to a virtual standstill, the rich haven't had access to their typical outlets for dropping cash.
ADVERTISEMENT
In speaking to Nathan Hendren, a Harvard economist and cofounder of the Opportunity Insights research team, Horsley reported that delivery services in wealthy neighborhoods have seen the biggest drop in sales, while lower-income neighborhoods have already started to rebound on retail and take-out restaurant spending.
According to NPR, the highest-earning 25% of Americans have been responsible for two-thirds of the total drop in national spending since January. Spending by lower-income households did increase after stimulus checks were released, but the spending of Americans in the top income brackets is still "far off" from pre-COVID levels, Horsley reports.
"From the perspective of people who are not living paycheck to paycheck, the main concern here is really fighting the virus," Hendren told NPR. "Unless we remove the threat of getting sick or getting your family members sick, it's hard to imagine that spending will recover to the pre-COVID levels."
The ultrawealthy's drop in spending may have a major ripple effect, but some businesses are pivoting to stay afloat
Because rich people have been slower to bring their spending back to pre-pandemic levels, employment has dropped for jobs that cater to wealthy individuals , Business Insider's Allana Akhtar previously reported. Hendren's team found that the biggest drop in employment from the coronavirus pandemic in the US was among low-wage workers in rich neighborhoods.
ADVERTISEMENT
But other businesses that cater to the wealthy are adapting their services or even their service areas to retain clients and customers.
Business Insider extensively reported on how wealthy people fled the big cities for their suburban second homes, turning many rural enclaves into coronavirus hotspots and disrupting local town life by causing a shortage of food and resources .
In Manhattan, places associated with money and means have already decided to follow their wealthy customers, many of whom fled to the Hamptons.
Eater's Ryan Sutton reported that the Italian restaurant Carbone now offers a Hamptons pickup service that starts at $500 per week, though one must commit a minimum of four weeks (or at least $2,000).
Meanwhile, Business Insider's Katie Warren reported that Avenues, an elite private school in Manhattan, planned to open a Hamptons outpost called Avenues Studio Hamptons, where tuition will be $48,000.
ADVERTISEMENT
See Also:
- Legendary watchmaker Patek Philippe just unveiled a massive new production building in Switzerland and is dropping a $28,000 limited edition watch to celebrate. Take a look at the photos here.
- The producer of the cult classic movie 'American Psycho' designed a home in Joshua Tree that looks like a fallen skyscraper, and it's almost entirely covered in mirrors. Take a look inside.
- The menswear guide to dressing for Zoom this summer: We asked top style experts to pick the 12 perfect shirts, pants, and style accessories for those hot summer months
FOLLOW BUSINESS INSIDER AFRICA
ADVERTISEMENT
Recommended articles
How SafeHamsters unlocks the potential of crypto betting| Insider Tips
A look into the diverse tax reforms being implemented across Africa
Dubai firm to lend South Sudan $12.9 billion in exchange for 20 years oil repayment
China dethrones USA as the most influential global power in Africa: Report
Major African economies expecting inflation ease into next year, except Nigeria
10 African countries with the lowest price changes in household commodities
Dangote refinery outranks Europe's 10 largest refining facilities
Africa may just have the lowest level of cyber threats compared to other regions