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According to a CNBC poll, American millionaires are cutting back on vacation spending and becoming more budget conscious in consequence of inflation, an indication that spending cuts are moving up the wealth ladder.
The CNBC Millionaire Survey found that 80% of millionaire respondents — individuals with $1 million or more in investable assets — say they plan to spend less this holiday season due to inflation. Millennials are the almost certainly to cut back, with 100% saying they plan to spend less, compared to 78% of baby boomers.
When asked how they respond to inflation, the vast majority of millionaires (52%) said they’re “more price conscious” when shopping, and a 3rd said they eat out less often.
“They’re getting more careful about how they spend their money,” said George Walper, president of Spectrem Group, which runs the Millionaire Survey from CNBC.
Walmart CFO John David Rainey said in November that almost three-quarters of the corporate’s growth in grocery market share within the quarter ended Oct. 31 got here from shoppers with incomes over $100,000, suggesting that even wealthy shoppers are on the lookout for the bottom prices.
Retailers serving a wealthier clientele – e.g Lululemon and PR — have also recently lowered their sales forecasts or expectations, showing early signs of weakness at the highest.
While inflation has affected their spending, millionaires are divided on changes of their investment portfolio due to inflation. When asked about making changes to their portfolio due to inflation, 29% said that they had made changes and one other 11% said they planned to make changes. Nearly a 3rd (30%) said they may or may not make changes, and 31% said that they had no plans to make any changes.
Walper said that while millionaire investors are fully aware of the impact of upper rates of interest on their investments and the necessity to switch portfolios, they’re unsure exactly what motion they need to take.
“They don’t seem to be sure where they need to make the changes,” he said. “People don’t need to try to sell time.”
Millionaires also expect inflation to remain high until 2023. When asked how long the present inflation rate of around 7% year-on-year will proceed, most respondents said a minimum of a 12 months and 12% said two to five years.
Still, millionaires generally consider within the Federal Reserve’s ability to bring inflation down. A majority of respondents (58%) said they were confident or “very confident” in regards to the Fed’s ability to manage rising inflation rates. Only 37% said they were “not confident in any respect”.
Nonetheless, belief within the Fed varies greatly by age and political party: most millennial millionaires (55%) have a “very sure” trust within the Fed, compared with only 5% of baby boomers. Walper said the disparity may stem from baby boomers’ memories of the Seventies, when the Federal Reserve struggled for years to rein in rampant inflation.
“Millennials just have not experienced such a inflation or rate of interest levels like this before,” he said.
Democrats are also more confident with the Fed. Greater than 80% of Democratic millionaires said they were “confident” or “very confident” on the central bank, while 56% of Republican millionaires said they were “not confident in any respect.”
The CNBC Millionaire Survey was conducted online in November. A complete of 761 respondents representing individuals making financial decisions of their households were qualified for the study. The survey is carried out twice a 12 months, in spring and autumn.
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