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A recent study conducted by the U.S.-based Luxury Institute, which looked at whether experts felt the current economic slowdown in luxury is turning into an economic downturn or a full recession, has provided a set of polarized opinions.

Surveying members of its Global Luxury Expert Network (GLEN), which is comprised of prominent luxury goods and services CEOs, high-ranking business executive and consultants, responders were asked to predict responders were also asked to predict how strongly major regions of the world may be affected, and the severity of the impact on key luxury categories, as well as trends they see emerging in the second half of 2022 and 2023.

A solid majority, or 59 percent of participants, stated that the slowdown is leading to a luxury downturn, as compared to 41 percent who predict it will lead to a full luxury recession.

Most of the survey participants indicated that they believe we are living in a modern period of unprecedented volatility and uncertainty. However, those who see only a downturn cite the strong cash balances of consumers and enterprises in the more developed markets that can help them withstand negative economic forces and the impact of war. They point to the resilience of affluent consumers, despite stock market losses, as a positive sign.

Those who are more inclined to predict a full-blown recession believe that the aggressive interest hikes of central banks, executed to fight runaway inflation, will create both white- and blue-collar unemployment, especially in tech, with strong consumer tightening of spending across all income levels. They state that persistent stock market losses are likely to affect the wallets and psyches of all segments of affluent consumers.


Regionally, for the Asia/Pacific region, the experts polled by the Luxury Institute predicted that if it is a downturn, the region led by China is resilient enough, particularly with strong government stimulus, to get past COVID effects and stabilize growth.

Those who saw a recession looming believe the impact will be strong in Asia/Pacific since China has a myriad of vulnerabilities, including COVID control, an unstable real estate market, a slowing economy, a dependency on expensive commodity imports, and continuing supply chain issues that affect exports.

In Europe, those who predicted only a downturn believe the effect will express itself at the medium range, whereas those who see a recession believe the impact will be strong. Besides the compounded effect on Europe of negative global economic factors, experts who predict a recession feel that war in Ukraine will dramatically increase local energy prices, drive inflation across consumer staples, and have a distinct negative impact on the economic engines of Germany, France and the United Kingdom.

For North America, experts who predict a downturn see mostly a medium impact effect, given America’s relatively stronger economy, including higher energy self-sufficiency and its distance from the war.

However, those who predict a global recession cite that many companies are already warning that American consumers are rapidly losing spending power momentum, and they point to the Federal Reserve’s stated commitment to aggressive interest rate increases as shock effects on housing and borrowing, while inflation continues unabated. The confluence of factors, they believe leads to an inevitable recession.

Some of the Luxury Institute respondents felt that the runaway inflation being experienced at present, along with central bank interest rates hikes, may precipitate a full-blown recession. (Photo credit:  Jack Prichett on

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With respect to luxury categories, regardless of the type of downturn, experts agree more on which categories will be hurt most, and which are most resilient.

The category most likely to thrive whether in a downturn or recession is consumer technology. It’s likely that consumers will cut back on many things, but food, housing, energy and now, technology, are pure life necessities.

Experts also predict that, irrespective of the outcome, wines and spirits, beauty, and health and wellness, which are perceived more as necessities of life now, especially by Millennials and Gen Z, will experience mild to medium effects.

Travel and leisure has been a strong growth category post pandemic. And, while no categories are immune, the expectations from both downturn and recession predictors are that will experience a mild or medium downward effect.

For fashion and leather goods and automotive, those who predict only a downturn feel it will have a stronger negative impact on the categories while those who predict a recession predict a lighter negative impact.

Luxury watches and jewelry are seen more likely to experience a medium level impact in either scenario due to supply shortages plus their high investment value.

Department stores are seen to be the most vulnerable category, by far. This is likely due to historically high overheads, high inventories, and low margins. Experts also point to the fact that digital multi-brand luxury retailers have proven to be unprofitable even during the best of times.