Millionaires cut spending, postpone big purchases for at least a year

Real Estate

A car dealer wearing a protective mask walks through the showroom at a Ford Motor Co. car dealership in North Brunswick, New Jersey, U.S, on Wednesday, May 20, 2020.

Angus Mordant | Bloomberg | Getty Images

Wealthy consumers plan to pull back on their spending, despite seeing little impact from the pandemic on their incomes and balance sheets, according to a new survey.

A majority of American millionaires say they plan to spend less this summer than in years past, according to the CNBC Millionaire Survey, which polls 750 people with investible assets of $1 million or more. Real estate, new cars and vacations are the expenses they are most likely to put on hold — and many won’t complete those purchases for at least a year.

More than 1 in 4 millionaires plan to postpone a real-estate purchase due to the coronavirus, according to the survey. Fully 15% plan to postpone the purchase of a car, and 10% plan to  postpone a vacation. 

When asked when they plan to  complete those purchases, the largest number (37%) said in 2021 or later. 

“The wealthy are still feeling cautious,” said George Walper, president of Sepctrem Group, which conducts the survey with CNBC. “They learned from the last crisis that maybe they need more of a cushion than they thought. They just don’t want to make a major purchase decision right now.”

To be sure, millionaires have been fairly insulated from the economic damage of the pandemic. A majority said their assets will be the same or higher at the end of the year, and nearly three quarters say their incomes will be the same or higher.

Yet their consumer caution could be driven in part by their overall view of the U.S. economy. Half believe the recession will last longer than the Great Recession of 2008-09. And when considering a major purchase like real-estate or a car, some may be waiting for prices to fall even more.

“They may be oportunistic and saying ‘why buy now if prices for these big purchases could fall even more,’ ” Walper said.

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