With the Middle East mired in war, China stuck in recovery mode and Europe showing only middling performance, the luxury sector is building its immediate future on the U.S. market.
But how strong of a foundation is it working with?
Despite a host of troubles — from President Donald Trump’s trade war with the world last year to an actual war in Iran — luxury spending in the U.S. has been holding up pretty well.
The first quarter extended the U.S. luxury rebound that started in mid-2025 and the latest callouts from the big players were good.
Cécile Cabanis, LVMH Moët Hennessy Louis Vuitton’s chief financial officer, described the trend with American clients as “quite homogeneous,” with improvement throughout the quarter. “We are quite happy with the performance,” she said.
And Kering, which seems to be struggling almost everywhere, marked the U.S. as a bright spot for its Gucci brand. Chief executive officer Luca de Meo told investors, “In the U.S., Gucci regained momentum because the brand is understood. Its identity resonates strongly and its fashion authority remained relatively intact. Clients there instinctively grasp what Gucci stands for. And this clarity fuels both engagement and cultural relevance.”
While the high and mighty — and those working their way back to that status — are feeling OK with the U.S. right now, any outlook for American luxury has to be qualified by some pretty big “Ifs.”
If the stock market holds… If the fallout from the Middle East oil shock doesn’t continue to spread… If the ceasefire with Iran leads to an end of hostilities… If nothing else goes wrong…then the U.S. luxury rebound remains on a solid footing.
And asking the world to stay still for a moment is asking it to break with its recent past.
“It’s important to look at the history a little bit because U.S. demand had been extremely strong immediately post-pandemic,” said Jelena Sokolova, an analyst at Morningstar Equity Research.
From 2019 through 2022, U.S. luxury sales grew by 25 percent annually, a big step up from the historical midsingle-digit rate of expansion, Sokolova said.
“People had extra money, stock markets were good, they couldn’t travel, they couldn’t go out and eat,” she said. “All the savings went into splurging on luxury goods.”
Then came the post-COVID-19 hangover of 2024 and 2025, which reset the market and, helpfully, has made for a much easier set of comparisons for companies looking forward to touting growth again.
And the stock market — a key predictor of luxury spending given the oodles of shares the affluent hold — is seemingly going from strength to strength. The Dow Jones Industrial Average is bumping up against its all-time high and traded above 49,000 on Tuesday.
Still, the stock market is a question mark, especially as it’s been driven by the ravenous spending related to AI, which one way or another promises more disruption in the future.
“The whole AI story, it’s pretty volatile,” Sokolova said. “For now it’s doing well, but a lot of this investment’s also underpinning the economic growth. You’re over-relying on one theme, which is a little bit shaky in terms of generating profits and very, very concentrated. There could be vulnerabilities here in the system for sure.
“It’s a very strong, very consistent recovery” for the luxury consumer in the U.S., she said. “It still remains a young recovery, still a little bit fragile.”
If there’s a canary in the coalmine for the U.S. luxury market — that one indicator that signals where it’s all headed — it’s the stock market, said consultant Nora Kleinewillinghoefer, luxury and fashion lead in Kearney’s consumer practice.
“If we start seeing the markets do something really drastic, that kind of volatility would be where high-net-worth and ultra-high-net-worth [shoppers] get impacted,” Kleinewillinghoefer said.
Right now, it’s so far, so good.
“I don’t see too much of a swing in the next few months,” she said. “I would say from a global story perspective, that is not the case. Everybody’s still waiting for the China recovery, and I don’t think it’s coming. We’re just settling into a new place where they have their own local brands. They have shifted their consumption patterns.”
The U.S. luxe shopper has also evolved, with aspirational consumers becoming choosier.
“Our ultra-high-net-worth and our high-net-worth individuals definitely are going to continue to be the focus, but in that K-shaped economy, we do still have an aspirational consumer,” Kleinewillinghoefer said.
“Our aspirational consumer is trading up and down depending on the category to be able to survive this sort of next window,” she said. “Also when things get difficult, luxury … On one hand it seems frivolous. On the other hand, it seems like the one reward you can give yourself to make it OK or to make yourself feel good. If you look at Sephora’s Q1 results, they’re growing. They’re doing phenomenally well because people are trading down. It’s still seen as a luxury. It’s buying a $200 beauty product, but it’s not buying a $1,000 handbag.”
Betting on the U.S. might be luxury’s only real opportunity right now — but it’s still a bet.
“The best thing [luxury brands] can do is give people a reason to come to you. The luxury houses need to double down on service and that dream” of luxury, Kleinewillinghoefer said. “Make people feel special, give them a reason to come to you. In the last few years with luxury, the regular price increases, the lack of innovation in the market has sort of made people a little bit disenchanted with the industry.
“Everybody has replaced their creative directors and they’ve made such big investments in sort of repositioning themselves,” she said. “And I think they need to double down on that. Once that bubble of the dream pops, then people just see [luxury] as higher cost goods. And if luxury starts feeling just like higher cost goods, then you’ve lost that edge.”
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000.