Despite high interest rates and consumers cutting back on spending, the demand for luxury goods remains strong. Americans are still willing to purchase high-end items from globally recognized brands.
According to currency strategists at Goldman Sachs, the renewed interest in luxury goods among US citizens stems from rising wages, buoyed by cooling inflation in the country. As a result, consumers have more cash to spend, with investors piling into stocks of European luxury goods, the investment firm noted.
Against this background, the bank's analysts have upgraded their rating on regional consumer goods and services to "overweight" from "neutral". Thus, luxury goods makers, in particular LVMH and Burberry Group Plc, stand to benefit from the positive wealth dynamics in the United States. Their securities have already edged higher in the past few weeks, driven by the steady income of most consumers.
In 2023, this sector experienced a downturn, feeling the pinch of weak demand from China, the largest consumer of luxury goods. However, the situation has now stabilized, Goldman Sachs pointed out.
