After a period of post-pandemic growth, the luxury sector is facing new economic realities. One of the industry’s most important markets, the potential for a US recession, exacerbating the sector’s continued slowdown and challenges Luxury’s pricing power and expansion strategies that define Luxury’s recent modalities. There is no guarantee that a full-scale recession will occur in 2025, but the cooling economy is already causing a change in spending, especially among wealthy consumers.
A recession is usually defined by a sustained decline in economic activity, characterized by a shrinking GDP, rising unemployment rates, and declining consumer spending. Key indicators include slower retail sales, lower industrial production and tightening credit terms. Inflationary pressures, hiking interest rates and geopolitical instability can also accelerate the risk of slump. Although there is no single trigger, the combination of these factors indicates a broader economic contraction.
