June drop in luxury spending draws concern

NEW YORK – Affluent Americans went back to tightening their belts in June after months of showing other shoppers how to spend, raising concerns for the overall economy.

Data released late Wednesday by MasterCard Advisors’ SpendingPulse shows luxury spending dropped in June for the first time since November.

After a surprisingly solid start to the year, overall spending also has slowed in recent months, and analysts are concerned that shoppers will remain tightfisted through the crucial holiday season.

The 3.9 percent decline in luxury spending from a year earlier is particularly worrisome because the well-heeled – households with annual incomes in the top 20 percent, about $158,000 on average – account for almost 40 percent of overall consumer spending.

And a downtrend in luxury spending, which excludes jewelry but includes upscale clothing, accessories and restaurants, could signal trouble for retail and in turn for the broader economy. Consumer spending – including such major expenses as health care – makes up about 70 percent of U.S. economic activity.

SpendingPulse saw revenue gains in clothing sales at mall-based chains but only because a large increase in children’s fashions compensated for the third monthly drop in women’s clothing. And spending for major home appliances was sluggish for the second straight month as government supports faded. Online spending in all categories, however, continued to increase. Consumer electronics spending also rose slightly, helped by sales of new products including the iPad from Apple Inc.

More data coming today covers June revenue at selected retailers’ stores that have been open at least a year, considered a key indicator.