Recession For Luxury Goods? Analysts Disagree

The market for ultra-posh goods has grown in the U.S. and abroad. But is it a luxurious bubble about to burst? Gary Shilling, president of A. Gary Shilling & Co., and James Hurley, managing director of Telsey Advisory Group, debated the future of big-ticket pleasures, on "Morning Call."

Shilling predicts that the luxury market is facing a "hair-curling recession." He told CNBC's Liz Claman that he believes the subprime housing market's problems will "take down the rest of housing and then sink the economy." He believes ripples will then shake private equity and other "areas of immense speculation," resulting in slashed "Wall Street bonuses."

And Shilling added that the wealthier "upper tier" has far greater exposure now to high-risk "unconventional" investments than it did in the past -- exposing the ultra-rich to an economic downturn.

But Hurley scoffed at Shilling's predictions, largely because luxury goods' "bullish sales" are driven by "awareness, higher level of product innovation and proven distribution." He maintains that "ultra-high-net worth individuals are not price-sensitive" -- and pointed out that "most do not have mortgages," so plunging home values pass them by. What could hurt luxury-goods sales? Hurley pointed to high-profile problems "outside the market," such as geopolitical risks, terrorism, or SARS.