Economics 101

Why the super rich might be spending less than they used to—and why that might be a problem

by John Stoll
3 September 2021 5 min read
Automakers like Bentley are seeing breakneck demand for cars costing hundreds of thousands of dollars, but there's evidence the wealthy are actually holding back Photo by Bentley

Judging by the atmosphere and sales in Monterey last month, life has returned to normal for the wealthiest among us. Yet the enthusiasm and relief on display at the ritzy event bely the bigger picture in the collector car world and the economy: The richest Americans aren’t opening their wallets as much as they used to.

In the 20 months since the start of 2020, the upper quartile of America’s wealthy have gotten far wealthier but have spent at a slower pace than the rest of the population, according to rolling analysis published weekly by Opportunity Insights.

That pattern carries into collector cars. Although the market has grown at an unprecedented pace during the pandemic and is on track for its best year ever in 2021, most of the gains have been for cars costing less than $50k. Vehicles valued at more than $1M in concours (#1) condition have essentially been flat since 2019, whereas those in the sub-$50k bracket have appreciated 16 percent. A far cry from 2013–2015, when million-dollar cars appreciated 69 percent and attainable ones lagged behind.

There were signs of this caution even within the happy bubble of Monterey. Total sales, at more than $350M, were vastly better than in 2019 but didn't quite match the peaks of the previous decade, when totals surpassed $360M in three different years. Sell-through rate for $1M+ vehicles was 69 percent—a marked improvement from the doldrums of 2019 but lower than the overall sell-through rate of 81 percent. Although there was vigorous bidding for seven-and eight-figure cars, a few high-profile misses, such as RM Sotheby's 1970 Porsche 917k and Gooding & Company's 1966 Ford GT40, made clear that collectors weren't here to buy everything in sight.

The problem with saving

You might fairly wonder why any of this is a problem, especially given the list of other concerns economists can wring their hands over right now—inflation, the new Delta variant, stubbornly high unemployment, to name a few. Yet if the richest among us are choosing to spend less, there could be consequences for everyone else. Simply put, the less money rich people spend on goods and services, the less wealth trickles down to everyone else.

“Since upper-income households saved more during this period, the outlook for consumer spending will largely depend on those households,” Oxford Economics economist Nancy Vanden Houten told CNBC in August, saying the savings versus spending situation “is unprecedented” and consequential for the broader marketplace.

The key reason the 1 percent aren't spending as much right now is one the 99 percent can relate to: Uncertainty. Concerns about public health, the environment, and the economy are driving the wealthiest Americans to plow money into equity markets, charities, or tax shelters. And like everyone else, the rich had fewer things to spend on during the height of the pandemic, and might not be able to make all that up now.

 “There are some limits in spending. Will wealthy people go on two vacations instead of one because they missed one in 2020? Or will they just take one more elaborate vacation? We don’t know," said Vanden Houten.

Vacationing is particularly hard if you can't find a plane. The shortages middle class Americans are seeing in everything from restaurant service to pickup trucks stretch all the way up to private jets, long seen as the ultimate symbol of status and extravagance. Much like the mass car market, the plane market is plagued by supply chain kinks that limit new inventory. This puts pressure on the used market, primarily because those with used planes aren’t selling because they can’t find a replacement. So, even if you’ve got the cash, it’s nearly impossible to find quality merchandise.

Data from real-estate services provider Zillow suggests the market for ultra-luxury homes, which had been red hot toward the end of 2020, has become similarly constrained by low inventory. This would suggest that the well-heeled are simply bumping up against old fashioned supply and demand.

"The rich are spending money like crazy"

Not everyone agrees the super rich are holding back.

“We have seen robust bidding and sales throughout the price spectrum since returning to live, in-person auctions in June 2020, especially prevalent in Monterey where all of our top ten sales exceeded $1 million," said Dave Magers, CEO of Mecum Auctions. Indeed, 121 cars valued at more than a million dollars crossed the block in Monterey, and more than two thirds of them found new homes.

Top-tier collectors are purchasing even more vehicles privately. “Wealthy people are spending money like crazy,” Mark Hyman, founder of Hyman Ltd. Classic Cars, said in an email. “Our sales of million dollar plus cars are stronger than ever before…I can tell you that at the upper end sales are extremely brisk.”

The notion that wealthy people might be eager to buy million-dollar cars but slightly shy about doing so in public plays into simple human psychology and herd behavior.

For instance, billionaires—as a peer group—are into good works or ambitious endeavors right now, whether they be philanthropic or egotistic. Three of the richest men in the world are in a space race that requires big money to win, for instance. The broader billionaire set, meanwhile, is on what one media outlet deemed a “philanthropic spending spree,” with charitable giving reaching nearly a half-trillion dollars in 2020, a record.

"Uneasy affluence"

When times are tough, rich people not only tend to give more away but also try to look like they are in touch with the masses. Boston Consulting Group, shortly after the pandemic, published a report outlining the troubles that certain luxury-goods makers would face if the coronavirus remained a problem for a long period of time.

“The next decade will be one of uneasy affluence, with shoppers in many parts of the world reverting to less conspicuous forms of luxury,” the firm said. “In a recent BCG consumer survey, more than half of the respondents expected their preference to increase for luxury items that are understated and everlasting.”

Shauna Moran, an insights analyst at marketing analytics firm GWI, said that while it’s generally true “the COVID-19 crisis put existing social inequities in the spotlight, making some less eager to show off their wealth. But research indicating that luxury has become more subtle and discreet rarely breaks this trend down by different audience segments.”

Moran notes that this is a year in which automakers like Bentley are seeing breakneck demand for cars costing hundreds of thousands of dollars, while other indulgences are seemingly taboo because they send the wrong message.

In other words, rich people—like every group of people—are not a monolith. This—along with the very unpredictability of the times we're living through—is why it is hard to make blanket statements, or longterm predictions, including as it relates to car buyers.

Still, the relatively restrained way in which the wealthiest are spending money right now, including at Monterey, suggests the era of purchasing prestige is not quite over but is being rethought.

Consider billionaire Elon Musk, who recently committed to give away $150 billion, and is spending heavily on trying to take the human race to Mars, but also unabashedly flaunts his $50,000 tiny prefabricated house in Boca Chica as a reflection of the more modest zeitgeist he’s trying to embrace.

In a Tweet, posted in June, Musk did confess to still owning one mega mansion in the Bay Area, but justified it as a heavily-utilized “event” space. “If I sold it, the house would see less use," he wrote.

As for the tiny house, he was sure to clarify that he is a renter, not the owner.


  • Jim Neiburger says:

    I’m just so sorry I read this story! Really! Please, try to offer useful or interesting content here rather than this sort of stuff.

  • William J Clark says:

    Good food for thought.

  • Robert F Brooker says:

    agree, what the ultrawealthy are doing is of no interest!

  • Tom R. says:

    IMHO auctions are entirely too subjective, and far from accurate. I enjoy going to Barrett Jackson in Phoenix yearly, but buying a car you’re lucky if they will even start for you, is insane. I understand the high end cars are tracked, etc, but if you’re not in the 1%, it doesn’t matter. It’s a crapshoot, and people with more money than brains with alcohol as their date. Ultimately cars are still only worth what someone will pay. Auctions are mearly a bit of information.

  • Henk de Vries says:

    Statistics are never simple. This article heaps all sorts of data together. The result makes no sense, reality is a lot more complex than this story suggests. Rich people are getting richer, and they spend. “Trickling down” of wealth is proven nonsense.

  • Henry Kandzerski says:

    The auction market is a small percentage of sales. Base your findings on the private sales market, now you will have some interesting statics. The classic car market is well and, really shouldn’t be based on the wealthy purchasing a Bentley or a Jet. I believe the shift in age of Classic Cars and their buyers would be a great find. Newport Concours has a special class 30 under 30 and should be investigated. The interest in brass era cars are keeping up with the sales market as well. Auctions are a tough venue for the middle class, the unknowns are too vast on auction purchases. It is ambiguous to base statics on a very small group of buyers.

  • jim rosenthal says:

    I think auctions tend to suffer from small sample size, with built in errors. Also, what’s the point of all this? It isn’t like anyone can DO anything about these economic conditions, anyway. You would be better served with articles about much more ordinary collectors. And WE would be FAR better served as well.

  • Ben Gleiberman says:

    Well said – any article that generates some controversy- shows that there are readers with differing opinions. Presented as well as any ‘Economics Review’ .

  • Greg Anderson says:

    I’m not really sure how mega rich collectors buying and selling amongst themselves will cause any sort of trickle down effect except for maybe for the transport companies and maybe the detailer hired to wipe away any specks of dust that might have accumulated during the move.

    The fact that the governments here in Canada and in the US are throwing money around like Oprah to anyone who can fill out an application has caused major spikes in prices in the sub 100K car market all the way down to the ratty project cars. Once the covid free for all has ended and reality returns, I’d imagine that most of these cars will be back up for sale again but it will take a couple years for prices to come back down to earth.

  • Douglas Allam says:

    I can’t believe you are espousing the trickle down theory. What a joke. This has been proven false for the past forty years. How does one affluent person purchasing a million dollar car from another affluent person trickle down? I assume you are counting the auction house cut.

  • Dustin Frenton says:

    Yea, I am not too interested in the top wealthy individuals are doing with their money unless it benefits the less fortunate or betters humanity.
    However from an investor standpoint, maybe this means that individuals that own classic cars that are find to find, that are less than $50K. Can we now up our tag price 25% on the wealthier crowds for more money due to supply / demand. Maybe.

  • BC in Chicago says:

    I politely disagree with those who found no value in this article. While I’m not in the category of the super affluent I think discourse of spending patterns of the top 1 percenters isn’t only relevant but foreshadows how the economy will trend. Considering the broad spectrum of values in the classic car market I found this info interesting and relevant.

    While not conclusive it’s well cited. No trend economically is absolute but a snapshot of what’s happening cited by referenced economic sources is IMO, always relevant, whether or not it addresses my economic segment or not.

    While presenting contradictory findings that in my mind simply reinforces that we are in very different times right now and that current economics affected by the Pandemic and new Administration has everybody holding one thing consistent, and that is uncertainty of our near future. Always relevant if not personally applicable.

    That being said expression of all opinions and the ability to do so in this forum is what I enjoy about Hagerty media.

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