Wealthy Americans Are Pulling Back: U.S. Luxury Spending Slumps Ahead of The Midterms.

U.S. luxury spending weakened for a third straight month in September, adding another warning sign for an industry that had been counting on affluent American consumers to offset sluggish demand overseas, is slowing down ahead of the midterm elections.

Credit card purchases at luxury brands fell 6% from a year earlier in September, according to Citi data seen by Reuters, accelerating from 4% declines in both July and August. The pullback comes at a difficult moment for luxury companies as brands have already been grappling with prolonged weakness in China and the economic consequences of the Iran war.

Citi's September figures indicate that even the American market is becoming less dependable. There is still a significant divide between the very wealthy and aspirational luxury shoppers. Citi said brands with greater exposure to high-end consumers should remain comparatively resilient because those customers continue to benefit from gains in financial assets.

That could provide some protection for companies with strong exposure to the U.S., including Coach and Kate Spade owner Tapestry, French luxury giant LVMH and Italian fashion house Ferragamo.

The weakness is also uneven across product categories. Spending on leather goods and ready-to-wear clothing improved compared with August, while purchases of luxury watches and jewelry deteriorated further in September, Citi said.

Pricing could be another factor shaping demand. Apparel, footwear and leather-goods brands have generally raised prices by low single-digit percentages this year, while watch and jewelry companies have implemented somewhat larger increases.

Consumer surveys have also shown deteriorating confidence, while rising Treasury yields and mortgage rates threaten to put additional pressure on economic activity. Separately, U.S. services activity slowed in September while businesses reported mounting price pressures, particularly from higher energy and commodity costs.

Political uncertainty could add another layer of caution. With control of Congress at stake in the November midterms, consumers and businesses are navigating questions about the economic and policy environment heading into 2027.

For luxury companies, the slowdown raises the stakes for the upcoming earnings season. Morgan Stanley analysts warned in September that weaker U.S. spending leaves luxury groups with limited room to produce the recovery investors have been waiting for after two years of contraction. Analysts expect companies to acknowledge softer American demand when they report their latest results.

LVMH, whose portfolio includes Louis Vuitton, Dior, Tiffany & Co. and other major luxury houses, is scheduled to report third-quarter sales on October 12 and will provide one of the industry's first major tests. The conglomerate has already lost more than $167 billion in market value this year as investors question when meaningful growth will return.

Kering, the owner of Gucci, is scheduled to report on October 22. The company recently warned analysts to expect a slowdown in the U.S. market, according to Italian brokerage Equita.