Luxury Consumers Look Like a Stable Spot in Bumpy Economy

By Karen Dybis | March 27, 2026

While the Iran war’s impact on the consumer economy has yet to be determined, recent economic reports show some guarded optimism, with luxury shoppers—and their willingness to spend despite rising gas prices and hits to their investment portfolio—lifting sales predictions and results.

According to the University of Michigan’s monthly consumer survey, consumer sentiment fell to its lowest point in March, declining 5.8% from the previous month and 6.6% year-over-year.

Consumers with middle and higher incomes and stock wealth felt the pain of higher gas prices and a bumpy stock market, said surveys director Joanne Hsu in a statement. The U of M report is based on consumer interviews done between Feb. 17 and March 23, with about two-thirds of them completed after the start of the Iran war.

“These patterns suggest that at this time, consumers may not expect recent negative developments to persist far into the future. These views are subject to change, however, if the Iran conflict becomes protracted or if higher energy prices pass through to overall inflation,” Hsu wrote.

On the plus side
A new forecast from the National Retail Federation (NRF) says retail sales will grow by 4.4% over last year, to $5.6 trillion. This is a more robust outlook than the NRF’s average of 3.6% over the past decade.

“People still want to go out to eat and celebrate occasions,” said Mark Mathews, NRF chief economist and executive director of research, on a March 18 media call for the release of the group’s sixth annual “State of Retail & the Consumer” report. Higher-income households are driving the majority of growth in spending across retail categories, he said.

The Kearney 2026 Global Luxury Industry Outlook, released March 11, said the global luxury market is “stabilizing at a more measured pace.” Kearney, a management consulting firm, forecast 2% to 4% growth in the market, which it called “more tempered.”

Kearney’s report did note that “emotionally resonant categories such as jewelry and experiences are outperforming other segments for both aspirational and core luxury consumers.”

An older study still worth a look is “The State of Fashion 2026,” released in December by Business of Fashion and McKinsey & Co. It pointed to jewelry as the fastest-growing category in fashion by unit sales, growing at nearly four times the rate of clothing.

“Both costume and fine jewelry are expected to grow similarly, with sales growing between 5.3 and 5.6% per year through 2028,” the report said.

On the down side
In its economic outlook released yesterday, the Organization for Economic Cooperation and Development (OECD) raised its inflation forecast, predicting the U.S. inflation rate will average 4.2% this year—up 1.2 percentage points from its previous forecast. OECD expects the global economy to grow 2.9% in 2026.

“The resilience of the global economy is now being tested,” the OECD report said. “Market expectations point to a gradual decline in energy prices, an assumption underpinning current projections. However, a prolonged disruption to shipments through the Strait of Hormuz or sustained closures of oil and gas facilities could lead to significantly worse outcomes.”

The increasing price of gas—now over $4 a gallon in some parts of the U.S.—could curtail consumer spending, trickling down to the costs of pretty much…everything. (Carnival Cruise Line, for example, cut its annual profit forecast on Friday, saying rising fuel costs are going to make its ships more expensive to operate.)

Gold’s price has also been affected by the Middle East war. On Monday, the spot price of gold dropped to $4,278, its lowest price of the year. It had reached an all-time high of $5,594.82 on Jan. 29. Some analysts believe the price has stabilized and should resume climbing, possibly toward $6,000 over the next year.

What to look for next
Next week’s U.S. employment report should add even more to this picture. Analysts are expecting the report, out April 3, to show about 48,000 jobs created and an unemployment rate of 4.5% for March. February’s report showed a decline of 92,000 jobs.

In its retail forecast, the NRF noted that labor markets are expected to soften generally but unemployment should remain below 4.5% in the near term.

As for the stock market, the S&P 500 this week dropped for the sixth straight week.

(Photo by Getty Images)