US luxury spending dips as shoppers retreat ahead of midterms

Citi analysts report that the downward trend follows drops of 4% in both July and August. While the top-end of the market remains partially supported by equity-market wealth, the broader sector faces significant headwinds. Brands with heavy exposure to the US, including Tapestry, LVMH, and Ferragamo, are feeling the pressure as the appetite for watches and jewellery hits a sharper decline than apparel or leather goods.

This cooling sentiment mirrors findings from the Conference Board and the University of Michigan, which highlight rising voter unease. With Treasury yields and mortgage rates climbing, economists warn that discretionary spending may continue to stall. Morgan Stanley analysts suggest that the luxury industry has little room to maneuver, leaving brands with few options to secure growth after two years of contraction. Investors are now looking toward the October 12 earnings report from LVMH for a clearer indication of how severe the industry-wide slowdown has become.