The Luxury Boom is Fuelled by Young Adults in the USA Living at Home
- Nearly half of young adults are living at home in the US — a historical high not seen since the Great Depression, per the US Census Bureau.
- Analysts at Morgan Stanley believe they are fueling a luxury boom.
- Living at home allows them to save money and gives them more income for spending.
A record number of young adults in the US are currently living at home. This is creating a luxury boom.
Recent data from the US Census BureauThe study shows that nearly half the young Americans aged 18 to 29 live with their parents. Morgan Stanley analysts wrote that this is a historical record not seen since the Great Depression.
Analysts predict that approximately 48% of young adults will be living with their parents by 2022. This is similar to levels in the 1940s.
The level of young adults who live at home reached 49.5% in 2020, coincident with the onset of the COVID-19 pandemic. This data was compiled by a Pew Research Center analysis and Morgan Stanley research.
This is great news for luxury retailers because it frees up income for discretionary spending by reducing daily necessities like rent or groceries, according to a team of Morgan Stanley analysts headed by Edouard Aubin.
The analysts wrote that “this is of course not all the reason luxury goods consumers in the West are getting younger (social media also playing an important part), but it is fundamentally positive for industry,” in the note.
Analysts also wrote that factors such as high rental costs, enrollment into higher-education programs, and delayed marital status are all factors that keep young adults at home.
According to a December 5th survey, 51% of young adults answered that they moved in with their parents to save money. 39% said it was because they couldn’t afford rent. PropertyManagement.com survey. Pollfish, a survey platform, conducted the survey online of approximately 1,200 US participants on December 1.
Similar themes are emerging in British youth
Similar themes are emerging across the Atlantic in the United Kingdom where 42% of young adults stayed with their parents in 2021. Based on data from 1996 to date by Morgan Stanley research and the Office for National Statistics, this is the highest recorded level.
Imports of luxury Swiss watches into Britain rose 31% in the first half 2022. the Guardian reportedIn June, according to data from Federation of the Swiss Watch Industry. The watches on average cost about £6,000, or about $7,400 at current exchange rates. Sales of mid-range watches — those below £2,500 — were falling at the time, the Guardian reported.
Burberry, a British luxury brand, is reportedThe September quarter saw a 11% increase in sales year-over-year. Luxury-goods maker LVMH, which owns brands including Dior, Tiffany, Moët Hennessy, and Louis Vuitton, reported a 19% on-year increase in third quarter of 2022 revenues — thanks to robust demand from Europe, the United States, and Japan.
An Insider Intelligence report on September 14 found that luxury goods sector in the US and China has bounced back post-COVID, but economic headwinds — like an impending recession — will weigh heavy on middle class spenders.
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