MW The rich keep spending money on 'unapologetic luxury' - and it's raising prices on everyday goods for everyone
By Greg Robb
The wealthy are unfazed by inflation, and that could complicate the Fed's ability to fight it
A shopper makes her way through the Miami Design District, which features stores from many luxury fashion names.
Haircuts for dogs that cost more than $1,000. Watch prices that are up double digits from last year thanks to connoisseurs bidding them up. These are just some of the ways that wealthy Americans are ramping up their spending with a focus on "unapologetic luxury" - and raising prices for the rest of us.
In the past, economists didn't worry too much about conspicuous consumption among the rich. After all, there's typically little impact to ordinary consumers or the economy at large if prices for yachts increase.
But the current wave of spending by the wealthy looks so strong that companies are responding by raising prices and adopting business plans that cater to the elite. With so much of the labor market focused on the whims of the wealthy, ordinary Americans are paying more for services like airfares. Meanwhile, the rich remain unfazed by inflation, pushing prices even higher.
That dynamic will make it difficult to bring inflation down. The tools that the Federal Reserve uses to combat inflation, like raising interest rates, typically have a more pronounced impact on low-income Americans, said Kitty Richards, a former Biden administration Treasury Department official and now a senior fellow at Groundwork Collaborative.
The Fed's new term for how the wealthy are spending: 'Unapologetic luxury'
It's hard to uncover data about wealthy Americans' spending habits because government statistics don't focus on the question. But the Fed's recent "beige book" report on the economy found what it deemed "unapologetic luxury" spending in the Southeast U.S. and strong retail sales at high-end retailers in the suburbs of New York City.
Interviews with financial planners confirmed this trend.
While wealthy people "are very cognizant of the high prices, they are continuing to spend" on everything from luxury travel and fine dining to real estate, said Neil Jesani, a financial planner and CEO of Neil Jesani Tax Advisors.
The war with Iran has pushed energy prices higher, raising costs for businesses. But because the wealthy are still spending, many companies are able to pass along those costs. Meanwhile, some services and goods being put out of reach for average Americans.
"Companies are saying, 'Let's just jack up the price as high as we possibly can and extract as much from the small set of wealthy people,'" Richards said.
Everything from eating out to kids' extracurricular activities has been warped by the wealthy's ability to spend regardless of the price, said Brian Eder, managing partner and private wealth advisor at OnePoint BFG Wealth Partners.
As the rich continue to consume, "service providers are raising prices, and people aren't changing course. If you're in that business and you're not increasing your pricing, you're missing out," Eder said.
"Without question, our economy is a tale of two cities" he added.
NBA and World Cup tickets, for which quantities are capped, are an extreme example of the way the wealthy's spending can put goods and services out of reach for ordinary Americans. Knicks fans spent as much as $13,000 per ticket for the NBA Finals this week; as of Thursday morning, prices for Saturday night's Game 5 started at roughly $1,700. Meanwhile, market prices for World Cup matches in New Jersey were ranging between $460 and $1,400 for the cheapest tickets, leading New York Mayor Zohran Mamdani to start a $50 ticket program.
"Rich people can't buy every car in America, but they can buy every single ticket to the World Cup or the NBA playoffs - and that's making those sporting events just totally out of reach for middle-class people," said Richards.
Lower-income groups get boxed out in other ways too. For example, Delta Air Lines $(DAL)$ recently shifted its focus to first-class passengers, while budget carrier Spirit Airlines was forced to go out of business. With less competition, airfare prices are rising for all customers, Richards noted: They're up 20% over the past three months, according to government data.
A perfect storm of wealth creation
Eder said the gap in spending power between those who are participating in the stock market and those who are not "is as wide as it's ever been in my 20-plus-year career."
Major gains in wealth for some Americans over the past few years, largely driven by higher stock prices, are contributing to the surge in spending, Richard Moody, chief economist at Regions Financial, said in an email.
"Perhaps more people are willing to splurge if they are confident the AI trade will fuel growth," he said.
Brian Bethune, an economist at Boston College, said the Federal Reserve has underestimated how much money spills into the economy from initial public offerings like the SpaceX $(SPCX)$ debut.
The two tax packages that President Trump has navigated through Congress have only "supercharged" these spending dynamics, Richards said.
"The wealth effect has never been more important to the U.S. economy," wrote Emily Roland and Matt Miskin, investment strategists at Manulife John Hancock Investments.
And all of this demand from a small sector of the population is likely to drive inflation even higher.
Demand for pet care, watches and luxury cars
The jump in prices in certain sectors highlights the ways that the spending habits of the wealthy are distorting the economy. The average price of a new luxury car has jumped 7% from a year ago, to $127,436 - with prices up 3.3% since April, according to Cox Automotive.
The National Association of Realtors said the recent rise in existing-home sales in May was fueled by a surge in sales of million-dollar homes.
Wealthy buyers are also competing to snap up high-end watches, pushing their prices up.
Chase Pion, co-founder of the Los Angeles-based luxury-watch marketplace Bezel, said he's seeing a lot of momentum in the market for ultraexpensive watches. He noted that more buyers are gravitating toward smaller watchmakers - sending prices higher for pieces made by brands like F.P. Journe, whose watches can run for $250,000, and even closer to $1 million at auction.
Paul Altieri, founder and CEO of Bob's Watches, an online watch marketplace based in Newport Beach, Calif., said sales so far this year are up more than 30%, helped by price increases and higher demand.
Jewelry prices are up a record 21% over the past year, according to the most recent inflation report from the government.
The pet-wellness industry is also booming, with dog owners willing to pay $1,000 for a grooming session, according to the New York Times. Jane Lauder, the wife of new Federal Reserve Chair Kevin Warsh, has started a venture fund to invest in products that promote pet wellness and longevity, the Times reported.
"I do think there is something here about the rich just operating in almost a self-contained economy - a cloud city - where they're all trading money with one another," said Richards of Groundwork Collaborative.
Wealthy Americans' spending complicates the Fed's approach to inflation
Wealthy consumers driving up inflation doesn't seem to be on the Fed's radar yet.
In recent speeches, many Fed officials said they're taking comfort in the fact that wage growth has stayed relatively low since the war with Iran started. Most Fed officials think inflation is ultimately driven by higher wages, which can cause prices to rise - setting off an inflation spiral.
In a recent interview with MarketWatch, New York Fed President John Williams highlighted that labor costs were "contained" and consistent with low inflation. While the spike in oil prices (CL00) (BRN00) was evident, Williams said he wasn't seeing any signs of spillover or persistent inflation.
"I'm hoping that inflation will come down later this year and next year as the effects of the tariffs and energy price increases become more ... in the rearview mirror," Williams said.
Richards said cooling inflation that reverses higher due to excess spending by the wealthy is a "nightmare" for the Fed.
The central bank's interest-rate tool to combat inflation would likely hurt lower-income groups more than it would impact the wealthy, she noted, as a hike in rates wouldn't likely cause the stock market to drop dramatically or put a big dent in real-estate prices.
Bill Peters and Venessa Wong contributed.
-Greg Robb
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June 13, 2026 08:30 ET (12:30 GMT)
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