Porsche Spyder, John Lennon Pianos, & Other Luxury Spending

Mar 21, 2011, 21:35 by Caroline Lorraine

The Porsche Spyder 918, a hybrid with a price tag of $630,000, will be launched soon. At art-auction houses Sotheby's and Christie's, USA Today reported Monday, sales reached $1.1 billion in the fall last year, almost twice the fall sales of 2009.

With U.S. stock markets on the rise, the wealthy are pulling out their wallets again, spending money on expensive cars, watches and art, various firms said.

Piano maker Steinway, where sales rose 11 percent in the third quarter compared with the same quarter of 2009, has produced 50 John Lennon edition pianos, modeled after the one owned by the late Beatle. Despite a price tag of at least $90,000, "There'll be no sleepless nights. We'll sell them all," said Ron Losby, president of Steinway & Sons-America.

"The market hasn't completely recovered, but there were five (art) sales over $50 million last year. That's unprecedented, even during boom times," said Katherine Jentleson, analytics director at industry tracker Art Research Technologies.

"There's clearly a lust for extreme luxury items."

Cadillac marketing head Don Butler said, "It's a good time to be targeting luxury consumers, but the market is extremely competitive."

Spending on luxury items has jumped with the Dow Jones industrial average up 89 percent since its recession low in March 2009. The Nasdaq index of tech-dominated stock, meanwhile, is close to a 10-year high.

"Personal embracement of luxury is now back to 2007 levels. We're seeing that in cars, private jet usage and, finally, in high-end real estate. There's a real change in the way people feel about money. They're making purchases they put off during the recession," said Jim Taylor, a marketing specialist at Harrison Group.

The surge in splurging also has "a huge downstream effect," he said.

For the economy, luxury spending is also a big shot in the arm. It may sound like an exclusive and isolated group of spenders, but the wealthiest 5 percent of households makes up 37 percent of consumer spending. In total, consumer spending accounts for about three-quarters of the nation's gross domestic product.