“The U.S. economic slowdown has shaken the confidence of even the most affluent Americans as losses spread from housing to financial assets, according to economists at Merrill Lynch & Co.
‘We are already seeing the dominoes fall because the well-heeled consumer is now seeing confidence decline at a much faster rate than everyone else (who are already washed out),’ writes David A. Rosenberg, North American economist at Merrill Lynch in New York, in a July 29 commentary on the Conference Board’s consumer confidence index.
The [Bloomberg] chart of the day shows the rapid decline in the Conference Board’s index for Americans with incomes greater than $50,000. The 12-month rate-of-change rivals the descent seen in the year prior to January 1991.”
∙ Rosenberg Says `Well-Heeled’ Join the Pain: Chart of the Day [Bloomberg]
∙ Bloomberg chart of the day: Consumer confidence, incomes over $50,000 [Bloomberg]
Wow, that chart looks awful. When I see graphs like that, I feel so fortunate to live in the great state of California where things are always up, Up, UP!
Is a person with an income of $50,001 “well-heeled”?
I know I have already gone through my monthly expenses and have made cuts and am putting that extra cash into savings, just in case.
Compared to a person with an income of $20,000, yes.
That is a national number so someone making $50,000 in Arkansas is certainly better off then a lot of their neighbors. I think they probably chose that level because that is when in the majority of the country people start having more discretionary income to spend and consumer spending drives a lot of the economy, and a consumer’s confidence in their financial situation effects how much they spend.
well heeled. $50,000 in mid America = $250,000 in SF. You have to make this to be well heeled by any means in SF. That is, unless you ahve a large number of assets or trust fund.
I think thats a bit OTT Spencer (the 250k).
I guess it depends on your definition of well-heeled.
Certainly rents are more expensive. But I think its possible to live well here without earning top dollar. You can eat out really well at reasonably priced restaurants compared to rest of US. Can also survive without a car (use zipcar if you need one for a few hours) fairly easily (I do) by using public transport.
The climate lends well to the outdoor lifestyle which doesnt involve having to spend much (hikes, walks, free concerts etc) and less heating, a/c costs.
If well heeled includes owning your own house, then I agree, otherwise no.
Amazing correspondence with the party in the Whitehouse!
Who really knows what “well-heeled” means, but Mrs. Foolio and I togehter make over $250k and hardly feel rich living in SF. Of course, we also rent, have no financial loans, drive paid-off cars, save like crazy, and boast impeccable credit.
I think in order to really feel “affluent” in SF you need to bring down closer to $500k.
well, yes. but this suggests that being “well-heeled” is entirely relative compared to those around you.
I guess I tend to think in more absolute terms. If I moved to manhattan and made exactly the same money and had exactly the same expenses would I automatically become less well heeled- not sure.
Wow, silly me, here I thought I felt well heeled. I can afford the payments on the condo I bought in SF, I buy whatever toys I want, I spend many weekends in the winter skiing, I fill up my vacation time with fun travel (including going on a cruise almsot every year), and I have no debt other then my mortgage. But I guess since my partner and I have never made more than $120,000 combined in a year I can’t consider myself well off.
@Rillion: Wow, nice! How were you able to buy a nice place with incomes under $120k?
That comparison to Arkansas is not well thought out. Aside from higher rental costs, things like produce and fresh foods are actually reasonable here, since SF is so close to the Central Valley. Sure, if you want those manicured large yards, then yes, you’re talking multimillion property. As an example, a 2/1 in the Sunset renting for $2200 would be $1300 in some place like Georgia. That’s $8400 per year more or $ 14,000 pretax, so $50 K is not equivalent to $250 K. So quit whining about living costs here, well at least if you rent.
Food is very reasonable in SF. The price probably increased 50% since 1997. Nothing to complain about.
And at this age of internet shopping, all the big items (TV, computer, or even automobile) cost the same.
So, I don’t know why people think SF is expensive (other than the housing).
the 250k comment has to do with considering myself well heeled compared to the people around me.
I guess i would consider the top 10-15% of income earners in an SF as well heeled.
the top 40% as moderatly heeled.
Agree with John here. Except for purchasing housing, SF is VERY reasonable in view of the amenities – MUCH cheaper than NYC, Greenwich, CT or London, the other places I’ve lived. Even cheaper than Ft Lauderdale or Boca Raton from what I can tell.
I’ve also found the cost to rent really nice SFHs in nonglamour parts of SF and the Bay Area to be VERY reasonable, especially in comparison with rents in the nice BYC suburbs, for instance.
In some ways, SF can be cheaper than many places in CA.
Take the produce: go to Chinatown or the Mission and the produce will be 20%-50% cheaper than your typical suburban supermarket.
It all depends on your lifestyle. There’s almost everything for everyone in this city.
Actually, SF is very expensive if you have children. Child care, schooling, enrichment activities like swimming lessons and music classes and even things like birthday party venues cost significantly more here than in other areas of the country. (And before I get flamed for the last point, imagine having eight boisterous four-year olds with sugar highs bouncing around an 1,100-square foot condo.)
SF is a lot of things, but inexpensive isn’t one of them. When you find yourself leaning on the idea of Chinatown produce (and I shop there myself) to support the argument, you’re on the defensive.
If you are so inclined, its easier make the argument that the Bay Area premium (on housing, gas, food, etc) is warranted by its premium quality.
FWIW, Burbed.com does an annual comparison of Bay Area (specifically Cupertino) prices with those of other cities. Here’s the 2007 version: http://www.burbed.com/2007/05/22/how-to-save-17-on-your-bbq-groceries-this-memorial-day/
Childcare in the Sunset was reasonable at least 5 years ago. We were paying $540/month for family care, now around $800 for the second kid. Some of the public schools are actually pretty good.
The premium comes about when you try to compete with the Joneses which it seems a lot of people around here try to do.
I agree with the keeping up with the jones comment kel.
It seems some people don’t think 250k is doing well because theres lots of people in the City who make more.
I guess the debate of whether poverty is relative or absolute can be applied to affluence too…
We found that the going rate for good quality full-time inhouse private nanny care with a mature, responsible woman out in St. Francis for about $24K per year. This was in a neighborhood of $1.5M – $3M homes.
A good friend of mine lives in Bronxville, NY, in a neighborhood of $1M-$2MM homes. His roughly equivalent nanny care was $50K per year, and the nannies wanted benefits too.
I’ve found things like swimming lessons, gymnastics classes, day camps and museum memberships for kids (Exploratorium, Chabot Space Center, etc.) to be less than 50% of what my friends in suburban New Jersey and Connecticut seem to be paying. Manhattan is off the charts.
I’m not saying SF isn’t expensive – it DEFINITELY is. It’s just nowhere near as expensive as the nice parts of metro NYC, the tony parts of south Florida, or even (perhaps) the nice parts of suburban Wahington, D.C. – other places where house purchase prices are LESS. It seems that the house purchase price is the outlier, at least in my limited experience.
@foolio:
I bought a small condo (2bd with only 825 sq. ft) in a neighborhood Spencer and a lot of other people would never consider (western addition). The condo also has restrictive HOA rules that do not allow it to be rented out unless you petition the HOA board claiming a financial emergancy (so that reduces some competition for the property, on a related note when I was shopping I got outbid on another condo by someone that was buying a rental property and putting 50% down to make the numbers work). But on the plus side it has deeded parking in a gated lot on the premises.
At the top of the market the 1bd condos were $400k, the 2bd’s were $500k, and the 3bd rooms were $625k (for “remodeled” unit). Prices have come down with a 3bd just selling for $565k (for an unremodeled unit).
I am torn about if I should be kicking myself for not having waited. On the one hand prices have fallen but on the other, none of the 2bd room units have sold since the one next door to mine sold for $500k last fall (a couple months after and a couple percent more then when I bought mine). The one upstairs briefly went on the market for $525k then was reduced to $495k and then withdrawn as the owners decided to wait (they don’t “have” to sell). So even if I had waited, it wasn’t guaranteed that I’d be able to get a unit cheaper.