U.S. consumer spending on luxury brands declined 5% year over year in the third quarter of 2026, reversing the increases recorded during the first six months of the year, according to credit card data analysed by Citi.
The bank reported a 6% annual decline in September, following reductions of 4% in July and August. September represented the largest monthly decrease of the quarter.
The third-quarter contraction followed spending growth of 5% in the first quarter and 3% in the second, making it the first quarter of 2026 to record a year-over-year decline.
Citi said the latest figures reflected a combination of continued geopolitical uncertainty and a more difficult comparison with spending levels a year earlier.
The two-year stacked spending measure also declined, moving to negative 6% in September from negative 5% in August.
Jewellery and Watches Record Larger Declines
Spending trends varied across luxury product categories during September, according to Citi’s transaction analysis.
Leather goods and ready-to-wear apparel showed sequential improvements, while jewellery and watch purchases declined more substantially.
The bank noted that comparisons with tariff-related purchases made a year earlier contributed to the reduction in jewellery and watch spending.
Average spending per transaction decreased by a low-single-digit percentage on an annual basis.
The number of customers making purchases also remained below the previous year’s level, falling 5%, although the customer growth measure improved compared with earlier readings.
These figures indicate that both transaction values and customer activity contributed to the annual reduction in spending during September.
Consumer Surveys Point to Softer Sentiment
Citi’s findings coincided with weaker consumer confidence readings in the United States.
September surveys conducted by the Conference Board and the University of Michigan indicated less favourable views of business conditions and employment prospects, alongside continuing concerns about inflation.
The bank said the latest transaction figures and commentary from luxury businesses suggest that U.S. spending patterns may be returning towards more normalised levels.
However, Citi expects consumers in higher-income groups to remain comparatively resilient, with gains in equity market wealth continuing to support their financial position.
The bank’s observations come ahead of the next round of corporate earnings announcements, when luxury companies are expected to provide updated information on regional demand.
Citi Identifies Luxury Groups With Greater US Market Exposure
Citi highlighted differences in the extent to which publicly traded luxury companies depend on U.S. consumers.
Tapestry (NYSE:TPR), Capri Holdings (NYSE:CPRI), Watches of Switzerland (LSE:WOSG), Birkenstock (NYSE:BIRK) and EssilorLuxottica (EU:EL) were identified among the companies with the greatest U.S. exposure.
Companies with comparatively lower exposure included Moncler (BIT:MONC), Prada Group (USOTC:PRDSY), Swatch Group (USOTC:SWGNF), Hermes (LSE:RMS) and Burberry (LSE:BRBY).
The geographic distribution of sales provides context for assessing how changes in U.S. luxury spending may affect individual companies.
Citi’s analysis uses selected credit card transaction records from a panel exceeding 10 million U.S. cardholders, meaning the results reflect the spending patterns of that sample rather than the entire luxury market.
The findings show that U.S. luxury spending moved into negative annual growth during the third quarter, with differences across product categories and customer spending measures ahead of the upcoming earnings season.
Leave a Reply