So, while the rest of the world is focused on the world markets, the fashion industry has been making headlines in its surprisingly steady increase in luxury brand items. Some examples include:
- Hermès’s 18% increase in consolidated sales.
- Dior’s 13% increase in sales in the first half of the year.
- Prada’s $9 billion initial public offering in Hong Kong.
- Louis Vuitton’s forecasted 13% increase in sales in the next six months.
Does this mean that the economy is due for a rebound sooner than we think? Increase in luxury spending is usually a good indicator of a strengthening economy because it shows that people have excess money to spend on non-necessities such as food, clothing, and shelter. It could also mean that people are willing to take on more credit card debt, but with banks loaning conservatively and credit card companies increasing interest rates, it would seem unlikely that people would spend money they didn’t have just to get that new purse.
However, it could also mean that the gap between the wealthy and poor are widening and it’s the wealthy who are spending more. Off the heels of high foreclosure and bankruptcy filing rates, a down economy offers to the wealthy opportunities to accumulate investments for a fraction of the cost.
Whichever the case, even though everything else about the economy is doom and gloom, at least everyone is looking fabulous and chic.