It's been tough to ignore the alarming cries—first from economists, then politicians, and now retailers—that the sky is falling. Retail sales reports reveal that many consumers have already gone into lockdown mode, eliminating even small indulgences—a new lipstick, a double Caramel Macchiato—from their spending patterns. Others, however, find the shopping habit harder to break. For the top-tier wealthiest, there's no need; the financial meltdown hasn't pushed them anywhere near the brink of bankruptcy, maybe reducing their millions to double rather than triple digits. But even those who have lost prestigious jobs and fat portfolios are not quite ready to cut up their AmEx platinum cards. On the contrary, there is a powerful urge to go on one last spending spree before reality kicks in. The emotional rationale seems to be that they're not going down without one last affirmation of status.
Historic price reductions in the world of high-end fashion retail contribute to the sense that one can't afford not to splurge. The day after Thanksgiving, Saks slashed prices up to 70 percent—a markdown that, traditionally, would have occurred only after the holiday shopping season ended on New Year's Day—forcing the rest of the city's premium retailers to follow suit. As a result, a friend of mine who works as an editor at a prominent international fashion trade magazine went on a spending rampage, racking up a major credit-card bill in the middle of a recession. Plenty of others had the same idea; although it was only early December, my friend complained that the racks at Barneys New York were already picked over, leaving only the least desirable sizes and styles. By the time I made it to the store a week or so before Christmas, it resembled the final hours of a warehouse-clearance sale: silk and cashmere scarves spilled off a display table like cotton-poly mufflers at T.J. Maxx, while Yohji Yamamoto pants languished on the floor, victims of a frenetic effort to find the best deals. Like squirrels at an acorn sale, customers were stocking up on luxury goods that, even in the best of times, might have been out of their financial reach. Then they retreated back home with their new purchases, ready to settle into consumer hibernation mode.
In India, though the Sensex exchange has lost more than 50 percent of its value, leading fashion designer Maharaj Raghavendra Rathore is pressing forward with plans to launch a fine-jewelry line. Rathore argues that jewelry is "a better investment than clothes, which are perishable." The local market bears him out; while India's diamond exports to countries like the United States have been dented, the domestic market, according to De Beers Group India, remains unaffected. A big reason is the seemingly recessionproof wedding season, which peaks in December and then again in May; at Gem Palace, the country's most famous brand-name jeweler, orders are still coming in for statement pieces with price tags that would make most Western brides blush.
Though the art market has cooled considerably, it has not completely collapsed. Clients are still buying—as long as the piece is appropriately valued and has a strong personal appeal. At Sotheby's recent impressionist and modern-art sale, the new year's first major test of the industry's resilience, a bronze version of Degas's most famous statue, "Little Dancer," sold for a record $19.2 million—$11.6 million more than collector John Madejski paid for it five years ago. Julie Engelmeier, the director of Nature Morte Berlin gallery, an offshoot of one of India's most influential art institutions, has also been doing a steady business. Even as bank after bank fell this winter, she was selling big-ticket pieces to collectors at prices up to $128,000. It makes perfect sense to her. "Cutting down a standard of living, spending and indulging is a very hard thing to commit to," she says. "The right piece of art can mean the world to a collector." And it's easier to binge on goods that will quickly regain their value—like art, jewelry and real estate—once the economy turns around.
The urge to splurge isn't exclusively the domain of the rich. I should know; while my bank balance doesn't even remotely qualify for any kind of big-spender's club, since this crisis began I have spent more money on frivolous goods than ever before in my life. To be sure, I have a somewhat solid rationalization: after eight years in a cramped New York apartment, I recently moved into my first pleasant living space, in Berlin, and I wanted to transform it into a real home. So I bid goodbye to some of my savings and welcomed a house full of collectible furniture from the 1980s. My impetus was pure emotional instinct: if I didn't indulge my desire by dipping into my savings now, it's unlikely that I—a freelance writer working amid a buckling media landscape—would have the means or the moxie to do it any time soon. It was as though I needed to pretend that a new vista of anxiety wasn't opening up before me, that if I just had that Ettore Sottsass glass-top table then my future would still be bright. I can't say that I regret this splurge; I'm still riding high in the honeymoon period that tends to accompany an irrational expenditure. And if the sky does fail to reoccupy its rightful place, and everything takes a turn for the worse, at least I'll be comfortably seated.