By Scott Burns
You know things are changing when you see a Ferrari dealership on the outskirts of San Antonio. Another sign: Bentleys and Aston Martins are crowding out the usual collection of Lexus, BMW and Mercedes at favored Dallas restaurants. All over America the symbols of wealth are becoming more expensive. The number of very well off people is rising at a rate surpassed only by their spending.
Generally, this is great news. Waiter, another bottle of champagne!
But every silver lining has a cloud.
For me, the first hint came back in 1999 when wealth researcher Mark Hurley described those with a net worth of $1 million to $10 million as "semi-affluent." Mind you, he didn't say it with a condescending sniff. It was a serious description of 7.5 million Americans.
Only one city in America, New York, has a greater population. If every resident of Los Angeles (3.8 million) and Chicago (2.8 million) had $1 million to $10 million, you'd still have to take over San Jose to house the remaining 900,000.
If you happen to be in this group I'll bet the idea of being "semi-affluent" is a tad bothersome. It makes you wonder what it will take to be a full scale affluent person.
Answer: More money.
The $2 million or $5 million that would have done quite nicely 10 years ago isn't enough today because there are so many people with more than $10 million. Robert Frank, who reports on wealth for the Wall Street Journal, likens the growing population of wealthy people to another country--- "Richistan." He divides it into Lower, Middle, and Upper Richistan.
You live in Lower Richistan if you're one of Mark Hurley's semi-affluent. You live in Middle Richistan if your net worth is $10 million to $100 million. That's another 2 million people, the equivalent of the combined populations of Columbus, Austin, and San Francisco.
You live in Upper Richistan if you have a net worth over $100 million. While it's a much smaller group than Lower or Middle, the Upper Richistanis still number in the thousands.
They also set the pace because most of this wealth is New Money. Very different from Old Money. When I lived in Boston one of my Old Money friends changed the oil on his Ford and drove his wife to Sears for her clothing. Redecorating their house meant a trip to the basement to unearth paintings, porcelains and other accessories grandmother had bought decades earlier.
The New Money spends on new things and old things, driving up their prices. The New Money also assumes that more money is on the way. And relatives don't have to die for the money to appear. So it's very positive money.
As I pointed out in "Trophy Inflation" all that new wealth is causing inflation of luxury goods. Reporter Frank estimates the inflation rate of Richistan to be 6 percent, double the rise of the broader Consumer Price Index.
One consequence--- chronicled by Frank and others--- is an odd anxiety. If you get caught up in this, remember one thing. The best thing is to have a seat at the feast. Our expectations are a choice, not a necessity.
