How the rich spend during a down economy

What do wealthy folks deem necessary? Travel, for one. In the American Affluence Research Center's survey, 61 percent of participants said they plan to spend the same amount of money on travel around the States as they did last year, and 26 percent plan to spend more. "If they are cutting back, it's on the number of days traveling and daily expenditures, not the quality of hotel or timeshare," says Kurtz.

High art also seems to be immune from the downturn. Hicham Aboutaam, head of Phoenix Ancient Art, an antiquities dealer with locations in Geneva and New York, says that only lower-quality, less-in-demand pieces will suffer. That explains the record prices at prominent auction houses within the last 12 months, including Francis Bacon's "Triptych" painting for $86 million at Sotheby's and Lucian Freud's "Benefits Supervisor Sleeping" at Christie's, both sold in May 2008.

"There is no clear correlation between what's happening in Wall Street and collecting art, except in the lower end," says Aboutaam. "High art, like the top percent of real estate, will continue to rise in price."

The same goes for fashion. While some European design houses are feeling the pinch of the weak dollar — Gucci saw sales drop 3.3 percent in the first quarter of 2008 — others are seeing an increase in demand for their bespoke (read: more expensive) offerings. Chanel reported that 2007 was its best year ever for couture. And Hermès, maker of the $8,000-plus Birkin bag, reported a third-quarter sales increase of 13.4 percent to 415 million euros ($639 million) from the same period in 2007.

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Kathleen Beckett, a fashion writer and personal shopper, says that her clients are still buying. "It's not like someone who ordered $30,000 worth of clothes last year has cut it down to $15,000," says Beckett. "People are terribly concerned for [those] who aren't as lucky as they are, but that doesn't mean they're not spending."

Maybe those who can afford it are still indulging in designer duds, but when it comes to cars and home upgrades, they're playing it cool. For now, anyway.

Only 27 percent of participants in the AARC survey with a net worth of $6 million or more said they plan to purchase or lease a new vehicle in the next year. And that number decreases as net worth decreases. In the $1.5 million to $5.9 million category, 23 percent plan to get a new set of wheels, while only 16 percent in the $800,000 to $1.4 million range said they were headed to the dealership. And just 21 percent of those with a net worth of $800,000 or more plan to upgrade their homes in 2008, according to the AARC survey.

So maybe the rich do feel the pinch a little. But there's no reason to feel too sorry for them. "In reality, they are still plenty rich," says Chung. "But the backsliding is what has them cutting back."

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