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Showing off wealth is no longer the way to signify having wealth.
Flashing a Louis Vuitton handbag or a multimillion-dollar Bugatti have long been standard status symbols for the elite, but the ultrawealthy have increasingly turned to intangible investments such as security and health to discreetly flaunt their wealth instead. An unlikely reflection of this transformation is the recent history of inflation in the US economy.
Consider American Enterprise Institute’s famous inflation chart, which was once dubbed by Bloomberg as “The Chart of the Century” and has made the rounds on various media platforms throughout the years.
The latest iteration, featured below, shows 54.6% overall inflation over the last 21 years, which works out to an annualized compound growth rate of 2.2%, very close to the Federal Reserve’s stated inflation target.
But as you can see, some services and goods have become way more expensive than others.
Hospital services, college tuition, medical services, and housing have seen disproportionate upticks past the average 54.6% inflation. Their costs have outpaced the hike in average hourly wages, which have shot up by 82.5%, or 28% more than the average increase in consumer prices.
Meanwhile, consumer goods such as new cars, clothing, computer software, toys, and TVs have become more affordable.
In a nutshell, it seems that the cost of intangible services (with the notable exception of housing) has increased while the cost of material goods has decreased, mirroring the shift from conspicuous to inconspicuous consumption.
The rise of discreet wealth
Inconspicuous consumption is a growing trend among not only millionaires and billionaires, but “the aspirational class.”
Elizabeth Currid-Halkett coined the term in her 2017 book, “The Sum of Small Things: A Theory of the Aspirational Class,” as the opposite of …read more
Source:: Business Insider