Ahead of Tuesday’s midterm elections, US consumer anxiety is at a high.
Thirty-four percent of respondents to an Economist/YouGov survey conducted in October considered the economy and inflation to be the most important issues facing the US. Sixty-seven percent of respondents said they disapproved of President Trump’s handling of inflation. And, when asked how they felt about their futures compared to 10 years ago, 48% said they were more pessimistic.
So why is everyone still shopping?
As reports of consumer sentiment edging close to all-time lows in the weeks leading up to the midterm elections (it dipped once again in October, falling to 48 from 48.1 in September, according to the University of Michigan’s consumer survey), luxury conglomerates continued referring to North America as a “bright spot” in their most recent quarterly earnings, reaffirming the United States as the boon that it has been for luxury this past year.
“People express frustration and anger and disappointment — and then they go out and shop,” says HSBC US head of retail and apparel Eric Fisch, noting that, despite cost of living increases, this applies to shoppers from mass to luxury. “I’ve consistently seen that, especially since Covid, where consumer spending disconnects from consumer sentiment.”
Though analysts have speculated a US normalization following its growth streak, the country has, for now, remained relatively stable. The Americas led growth at Zegna, up 14%. “In particular, the Americas continued its double-digit trend, despite an increasingly demanding comparison base,” executive chair Ermenegildo “Gildo” Zegna said in a statement. At Hermès, Americas revenues were up 8.8% in the third quarter, also posting the highest growth by region. North America was Kering’s only growth region, up 1% in Q3. It was also up for Moncler and Ferragamo.
Analysts aren’t convinced that the forthcoming midterm elections will have much impact on this still-positive trajectory. If anything, they agree, there might be a slight dip, but not one that will hurt the holidays. “Historically speaking, consumers don’t really let elections influence their spending all that much,” says Neil Saunders, managing director of Globaldata’s retail division. Fisch notes that the ramp up in political ads has crowded exposure for brands, but that should clear up by the holidays.
Brands and analysts alike remain bullish on the US. Fisch, who has just returned from two weeks in Europe, says that many of the brands he spoke with on the ground are hedging their bets on the US shopper. The recent unrest in Europe and continued softness in the Middle East means brands are banking even more — and putting extra pressure — on the US. “The events in Europe are only going to provide more of a cloud over the consumer there, making it more challenging,” Fisch says. “The US continues to be the growth engine and the opportunity.” He adds that many brands are continuing to invest capital in the country.
