High-end jewelry retailer Tiffany & Co. posted an impressive 22% rise in sales for its first quarter ending April 30, 2010, compared to the same period in 2009. Once luxury companies start rebounding, that's generally a positive sign for economic recovery. So should we take this to indicate the growing strength of the U.S. consumer? Sort of, but we shouldn't get carried away.

If you break down the Americas' stores contributions, you quickly find that its flagship New York store made up a very large portion of that 22%. In nominal terms, Tiffany had $57 million more in Americas sales for the first quarter of 2010. Using the data provided, you can estimate how this breaks down for its flagship versus the others in the Americas. If you do, you find that around $47 million came from that single store. Only around $10 million came from the rest. That breaks down into a 26% increase for the New York store, and a 13% increase for its other U.S. locations.

Of course, 13% isn't bad -- but it isn't 26%, or even 22%. What this likely means is that consumers are, indeed, stronger, but most of the impressive result is coming from New York.

Why does this matter? Because New York City isn't a microcosm of the rest of the U.S. economy. Its economy was explicitly bailed out, as the financial sector benefited hugely by government intervention. As a result, Wall Street got back to business as usual much more quickly than the rest of the U.S. Lawyers, consultants and accountants located in Manhattan consequently made more money, as did all other companies based in New York City, down to the hot dog vendors. All would have been worse off without a rescue. As a result, Tiffany, and likely other luxury retail stores in Manhattan, benefited disproportionately. New York City's wealthy recovered more quickly than average Americans.

Additionally, wealthier individuals are generally coming out of the recession more quickly than low- and middle-class Americans. Part of that has to do with the broad stock market recovery that the U.S. experienced since March 2009 lows. That wealth effect will be felt a lot more by the rich, since they have bigger investment portfolios than other Americans. Consequently, it makes sense that luxury would begin to rebound. After all, not many poor or even middle-class Americans shop at Tiffany's.

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