Venezuelans on a spending spree

CARACAS, Venezuela — Manuel Rodriguez was walking through his neighborhood on a recent Saturday when he passed a Harley-Davidson showroom.

Rodriguez ducked inside, got on several gleaming motorcycles and within minutes was negotiating with a dealer to purchase two Harley-Davidson Road Kings — one for himself and another for his 30-year-old son. The total price: $57,000.

"It's unbelievable. What a bike!" said the 57-year-old factory owner. "I've always wanted to have one before I turned 60."

Like many Venezuelans, Rodriguez is flush with cash as this South American country rides an unprecedented wave of prosperity fueled by high oil prices, cheap credit and massive government spending that has created a new elite and bolstered President Hugo Chávez's popularity less than a month before he seeks re-election.

From a $50,000 Hummer to a $500 Dolce & Gabbana cellphone to a $10 glass of Buchanan's 18-year-old Scotch whiskey, Venezuelans are spending money like never before as the economy grows at a 9 percent clip this year.

Car sales are up 70 percent the past 12 months in a nation where gasoline runs about 18 cents a gallon, and the Venezuelan stock market has soared 70 percent since January. Housing prices in Caracas have tripled in four years, economists say.

Status, decadence

It seems as if a new restaurant or late-night lounge is opening every month in Altamira and other wealthy Caracas neighborhoods. Banks are even offering credit for nose jobs, tummy tucks and other cosmetic surgeries in this beauty-obsessed nation.

"There is a lot of money out there," said David Morales, a prominent Caracas plastic surgeon whose practice is up 20 percent since 2005. "There is a strange feeling that it's not going to last, and everyone wants to get something now before it goes away."

One day in June, Morales spent $32,000 on a Jeep Grand Cherokee sport-utility vehicle and $28,000 for a Harley-Davidson.

Aurelio Garcia, Morales' car dealer, said the demand is so high that customers are waiting months for a new vehicle. He said Venezuelans are trading in cars that are only a year or two old.

"It's the best year [in sales] we've had in our history," said Garcia, who works at Noel Motors Centro, a 30-year-old Chrysler dealership in Caracas. "It's crazy what's happening now."

The surge in car and truck sales has been good for Garcia's wallet.

In July he took his wife and three children on a 22-day jaunt through Argentina and Chile. He's saving up for a family ski vacation to Killington, Vt., followed by a visit to Walt Disney World in Orlando.

This is not the first time Venezuela has enjoyed an oil-fueled prosperity. In the 1970s, the country became known as Saudi Venezuela because of its free-spending ways.

Fabian Lugo, a journalist and restaurant critic, argued that Venezuelans' appetite for luxury goods is grounded in a culture of conspicuous consumption, though some residents are trying not to be too showy to avoid being targeted by kidnappers and other criminals.

"Venezuelans are very open to new things, and they like showing off what they have as a sign of status," Lugo said. "There is a certain decadence."

Yet analysts and retailers say the boom that began in 2004 is different from previous ones during which the benefits were largely confined to Venezuela's traditional elite.

The newly wealthy

This time a new moneyed class known as the boliburguesa, a combination of the words Bolivarian and bourgeoisie, is emerging from among supporters of Venezuela's charismatic leftist president.

One Caracas wedding consultant said the nouveau riche are throwing $50,000 receptions.

"There are more Chavistas," said the businesswoman, using the local slang to describe the president's supporters. "There are various midranking military officers, including colonels, and people in the government," she said, declining to be named for fear of government retribution.

Impoverished Venezuelans, who make up the vast majority of this nation's 26 million people, also are doing better thanks to an explosion in government spending.

Buoyed by record oil revenues, Chávez has allocated billions of dollars for health care, education, discounted food and other programs.

Chávez raised pensions and boosted the minimum wage while encouraging banks to provide credit to moderate-income Venezuelans looking to purchase a new home or car.

"My salary went up 20 percent this year," said Juan Carlos Trujillo, 37, a factory worker who was shopping for a refrigerator at Pablo Electronica, a bustling Caracas retailer. "The poor are buying more. Everyone is better off."

Much of the cash for Chávez's socialist programs is coming from the United States, which imports more than 1.1 million barrels of Venezuelan oil a day despite being described by the Venezuelan leader as the biggest terrorist nation on Earth.

Venezuela is the fourth-largest supplier of imported crude to the United States after Canada, Mexico and Saudi Arabia, according to U.S. government figures.

Will prosperity last?

Luis Vicente Leon, a political analyst and pollster, said the economic boom coupled with large-scale government spending are the primary reasons Chávez is likely to defeat his main challenger, Manuel Rosales, in the Dec. 3 presidential election.

But Leon cautioned that Chávez's policies have not lifted many Venezuelans out of poverty or spurred private investment and manufacturing growth.

"It's one thing to have a boom in consumption caused by high oil prices, but it's another to make structural changes in the economy to assure growth in the future," said Jose Grasso Vecchio, a Venezuelan economist.

Experts fear a fall in oil prices could lead to economic collapse.

Venezuelan Vice President Jose Vicente Rangel said last week he was unconcerned about falling oil prices because Venezuela's budget is based on an average oil price of $29 a barrel, far below the current $59 a barrel.

Rangel said Venezuela has nearly $60 billion in international reserves and other funds, enough to cover "whatever emergency" may arise.

Yet some Venezuelans remain unconvinced the economy is on solid ground.

Luis Macuare, 32, a computer technician who earns about $425 a month, said he purchased a refrigerator, washing machine and stove last month as a hedge against inflation, which this year remains above 10 percent annually.

Others, like Luis Estrada, co-owner of Caracas' Harley-Davidson dealership, are taking a more prudent approach to spending despite a doubling of motorcycle sales this year.

"I'm saving my money for a rainy day," he said.