FOR A city in the grip of recession, New York does a fine imitation of a thriving financial capital. The subprime mortgages that are crippling the US economy were underwritten here, on a jittery stock exchange bracing itself for more bad news, but restaurants remain full, the best theatre tickets are still hard to come by and Fifth Avenue is the same orgy of consumption it was last year.

This appearance is deceptive, though. On the most popular stretch of the high-end shops, from Central Park to 42nd Street, the multilingual chatter suggests that a great deal of the money floating through Manhattan is foreign. Saks, one of New York's most expensive department stores, recently announced that fourth-quarter profits are up 83%, but the people buying all those luxury Christmas presents were Brazilian, European, Indian and Chinese.

Further downtown, Donald Trump's latest skyscraper was half-sold long before it was half-built. Trump Soho is a "condominium hotel" of apartments that can only legally be occupied 120 days a year. Michael Idov, from New York Magazine, told me: "The buyers are almost universally Russian and Latin American. These are glorified hotel rooms. New York is becoming a pied-a-terre city."

Bruce Ratner's controversial Atlantic Yards development has been promising to transform the Brooklyn skyline for several years now, but last week he admitted that much of it may never be built. Recessions have a history of killing construction projects conceived on an upswing in the cycle of boom and bust.

For now, the billionaire housing market is immune. In his latest appraisal of the most expensive residential areas of Manhattan, broker Kirk Henckels concluded that "the strong momentum of luxury real estate sales continued unabated throughout the second half of 2007 despite the subprime problems. It was a clear example of continued strong demand, even more money and no supply. Miraculously, and despite it all, this pattern continues into 2008."

Bonuses at the five largest Wall Street securities firms in 2007 were the highest ever, worth $38 billion, despite shareholders losing a total $74bn in equity. This was partly because Goldman Sachs had an extraordinary year, forcing its rivals to match its bonuses to avoid losing top staff. The nature of hedge funds also means that, whether the market rises or falls, astute traders get rich.

The Luxury Institute is a New-York-based consultancy firm that specialises in the tastes of the ultra-wealthy. According to its founder, Milton Pedraza, there are clear indicators the recession is biting billionaires, but nobody will admit it.

He said: "We talk to private jet companies, yacht charter and yacht building companies, jewellery and watch companies. Everybody is soft right now. Limousine companies, taxi drivers and restaurants, off the record, will say demand is soft. Business and entertainment expenses are being cut back. No matter how you slice it, it's down. But of course no-one wants to go on record as saying that."

The first rule of recession is you do not talk about recession. In New York, you certainly never mention the last major slump, which lasted from 1988 to 1993. It too began with a sharp decline in property valuations, when the dollar was weak and oil prices high, causing a severe tightening of credit. House prices in Manhattan fell by more than a quarter. The city lost one in 10 of its jobs.

In the depths of the crisis, investors Ronald Perelman and Gerald Ford bought First Gibraltar bank for a knockdown $315 million, with the aid of a huge injection of government money. Five years later they sold up for $1bn.

The CEO of JPMorgan, Jamie Dimon, is hoping to do something similar. Agreeing to the federally assisted emergency takeover of Bear Stearns at just $2 a share, Dimon recalled Warren Buffett's maxim for successful investment: "Be fearful when others are greedy and greedy only when others are fearful."

One group with nothing to fear is New York's old money elite. The Vanderbilts, Rockefellers, Guggenheims and Astors weathered the Great Depression without worrying about their status, power or immense fortunes.

Jamie Johnson, heir to the Johnson & Johnson pharmaceutical empire, has made two documentaries about his obscenely rich friends who live in a privileged bubble, oblivious to the real world. Last week, on the political comment website, the Huffington Post, he suggested many of them want stocks to fall.

"There may be widespread fears of an impending recession running through the minds of most Americans," he wrote, "but many of the wealthiest Americans aren't worried about the weakening economy at all, they are actually excited about it."

This is partly because billionaires tend to have exceptionally diverse, well-hedged investments, but it is also a product of ingrained snobbery. To New York's poorest, recession means redundancy, repossession, belt-tightening at the very least. To the hyper-rich, it means fewer wannabes in first class and fewer private jets on the runway.

"With the threat of a recession looming on the horizon," Johnson wrote, "I hear many of them saying Thank God, it's about time'."