Is there a stable base for US luxury spending growth?

with the middle east caught in the warWith China stuck in recovery mode and Europe showing only moderate performance, the luxury sector is basing its immediate future on the US market.

But how strong a foundation is it working with?

Despite a number of troubles — from President Donald Trump’s trade war with the world to an actual war in Iran — last year, luxury spending in the US has been quite good.

The first quarter extended the US luxury rebound that began in mid-2025 and the latest callouts from the big players were good.

Cecil Cabanis, LVMH Moët Hennessy Louis VuittonInc.’s chief financial officer described US customer trends as “fairly flat” with improvements throughout the quarter. “We are very happy with the performance,” he said.

And KeringJoe, who seems to be struggling almost everywhere else, has marked America as a bright spot for his Gucci brand. Chief Executive Luca de Meo told investors, “In the US, Gucci has regained momentum because the brand is understood. Its identity resonates strongly and its fashion authority remains relatively intact. Customers there intuitively understand what Gucci stands for. And that clarity drives both engagement and cultural relevance.”

While the high and mighty – and those working to get back to that position – are feeling fine with America right now, any approach to American luxury needs to be qualified by some very big “ifs.”

If the stock market holds up… if the oil shock does not continue to spread through the Middle East… if an armistice with Iran ends hostilities… if nothing else goes wrong… then the American luxury rebound remains on solid ground.

And to ask the world to be quiet for a moment is to ask it to break with its recent past.

“It’s important to look at history a little bit because U.S. demand was extremely strong immediately after the pandemic,” said Jelena Sokolova, an analyst at Morningstar Equity Research.

Sokolova said that from 2019 to 2022, U.S. luxury sales are projected to grow 25 percent annually, a big step up from the historical mid-digit rate of expansion.

“People had extra money, the stock markets were good, they couldn’t travel, they couldn’t go out and eat,” he said. “All the savings were spent on luxury goods.”

Then came the post-COVID-19 hangover of 2024 and 2025, which reset the market and, helpfully, have created a much easier set of comparisons for companies hoping to grow again.

And the stock market – a key predictor of luxury spending given the rich holdings of many stocks – continues to go from strength to strength. The Dow Jones Industrial Average is reaching its all-time high and trading above 49,000 on Tuesday.

Still, the stock market is a question mark, especially as it is driven by massive AI-related spending, which promises more disruption in the future one way or the other.

“The whole story of AI, it’s quite fluid,” Sokolova said. “At the moment it is performing well, but a large part of this investment is also undermining economic growth. You are relying heavily on a subject that is a bit volatile and very concentrated in terms of generating profits. There may certainly be weaknesses in the system here.

“It’s been a very strong, very consistent recovery for the luxury consumer in the US,” he said. “It’s still a young reform, still a little fragile.”

If there’s a canary in the coal mine for the U.S. luxury market — the one indicator that signals where this is all headed — it’s the stock market, said consultant Nora Kleinwillinghoffer, a luxury and fashion leader in Kearney’s consumer practice.

“If we start to see the market do something really drastic, there will be that kind of volatility where high-net-worth and ultra-high-net-worth (shoppers) will be impacted,” Kleinwillinghoffer said.

Right now, it’s very, very good.

“I don’t see much changing in the next few months,” he said. “I would say from a global story perspective, it’s not. Everyone is still waiting for China’s recovery, and I don’t think it’s coming. We’re just settling into a new place where they have their local brands. They’ve changed their consumption patterns.”

The American luxury shopper has also evolved, with aspirational consumers becoming more selective.

“There will certainly continue to be a focus on our ultra-high-net-worth and our high-net-worth individuals, but in that K-shaped economy, we still have an aspirational consumer,” Kleinwillinghoffer said.

“Our aspirational consumer is trading up and down on a category basis to be able to survive in this next window,” he said. “Plus when things get tough, luxury… on one hand it seems trivial. On the other hand, it’s a reward you can give yourself for getting it right or making yourself feel good. If you look at Sephora’s Q1 results, they’re up. They’re performing exceptionally 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 America may be the only real opportunity for luxury right now – but it’s still a bet.

Kleinwillinghoffer said, “The best thing (luxury brands) can do is give people a reason to come to you. Luxury homes need to double down on service and the dream of luxury.” “Make people feel special, give them a reason to come to you. Over the last few years with luxury, the regular price increases, the lack of innovation in the market has made people a little disillusioned with the industry.

“everybody has Their creative director was replaced“And they’ve made such a huge investment to reestablish themselves,” he said. “And I think they need to double down on that. Once the dream bubble bursts, people see (luxury) only as high-cost goods. And if luxuries start to feel like mere high-cost items, you’ve lost that edge.”

The Bottom Line is a business analysis column written by deputy managing editor Evan Clark, who has covered the fashion industry since 2000.