Shoppers aren't skimping on luxury, but a “richcession” could be on the horizon

Prada? In this economy?… “I could have my Gucci on” takes a literal turn: 62% of respondents in a new Saks Fifth Avenue survey said they planned to spend the same or more on luxury goods in the coming months. It’s a theme: global luxury sales grew 22% last year as consumers shrugged off price hikes from brands like Chanel and Hermès. In January, Dior owner Moët Hennessy Louis Vuitton (aka: LVMH) reported record revenue and profit, and last week Prada reported booming annual sales.

Not so home alone… It might seem odd that luxury sales are thriving in this high-interest-rate, recession-flavored environment. But an unlikely cohort may be keeping the cash flowing: young adults who moved back in with the ’rents (#no-pay-rent). Nearly half of US adults 18 to 29 live at home, and Morgan Stanley suggested that some of that money saved on housing is being spent on handbags. Spending by Gen Z and millennials accounted for all of the luxury sector's growth last year. But rent-free livin' is probably not the only luxury booster:

• IOU for Jacquemus: Consumers have been leveraging credit and buy now, pay later services to make flashy purchases. Credit-card debt is at a record high, soaring 19% last quarter.
• Gucci-gram: Social media is driving luxe splurging among younger consumers, who see designer staples as TikTok status symbols.
• The rich = still richer: The top 40% of earners built up $1T+ in extra savings during the pandemic.