Share swoop planned by wealthy

More people with money to splash on luxuries, such as new TVs and eating out, are cutting back as the economic gloom mounts.

But the economically privileged are still spending on travel and some plan to buy shares because they think stockmarkets have fallen too far.

Freelance economist Tony Alexander does monthly surveys with the 27,000 people who subscribe to his economics newsletters and his July survey showed a net 27% planned to reduce their spending over the coming three to six months.

The net figure is calculated by subtracting the number of people who said they intended to increase their spending, or hold it unchanged, from those who planned to tighten their belts.

The subscribers are older, wealthier and more financially engaged than the general population, giving an insight into spending confidence among the better-off. Alexander said confidence to spend had been on a downward track for the past 12 months. In December, a net 17% were still feeling confident enough to be planning to increase spending. But by February a net 11% were planning to make cuts.

The decline in sentiment had begun with rising mortgage rates and intensified as inflation rose, and then continued to worsen as house prices started to fall, Alexander said. Spending cutbacks covered most areas of the household budget but eating out was the most common thing.

‘‘A record net 36% of people plan to reduce their spending on eating out,’’ Alexander said.

‘‘It is going to be a tough winter for hospitality.’’ The survey also indicated clothing and shoe retailers were going to have a hard time in coming months.

But there were areas in which increases were planned. They expected to spend more on groceries, international and domestic travel, and shares. ‘‘Whereas there are strong expectations that house prices will continue to fall, that is not necessarily the case for shares.’’ While many households were suffering, others were far less affected by things like rising home loan rates, Alexander said.

‘‘People make the mistake of believing hard times for some mean hard times for all.

‘‘Only one-third of households have a mortgage and plenty of people know that when the number of headless chooks running around is near a peak, that is the optimal time for buying as prices will be cheap and owners/vendors are amenable to negotiation.’’

‘‘It is going to be a tough winter for hospitality.’’

Tony Alexander Economist