ALSO READ | US Midterms 2026: Alaska LNG, the pipe dream that could decide a Senate seat

The luxury brands most exposed to the phenomenon include Tapestry, owner of Coach and Kate Spade; French conglomerate LVMH, known for brands like Louis Vuitton and Tiffany; and Italy’s Ferragamo.

“Brands with greater exposure to higher-end consumers should remain relatively resilient, supported by equity-market wealth effects,” Citi analysts said.

While spending on leather goods and ready-to-wear items improved sequentially in September, watches and luxury jewellery followed a path of deterioration.

“Most soft luxury brands which sell apparel, shoes and leather goods have raised their prices by low single digits in percentage terms so far this year, slightly below the low to mid-single-digit price increases from watch and ‌jewellery ⁠makers,” Citi analysts noted.

The Citi data, based on millions of credit card transactions, backed surveys from the Conference Board and the University of Michigan that showed growing unease about the US economy among the voters ahead of the midterm elections, which will decide who will control the Congress until the 2029 presidential elections.

ALSO READ | Trump expands tax-exempt diesel access as high fuel prices become midterm issue

While Citi noted that the run-up to elections is often marked by heightened caution among consumers and businesses as political ⁠uncertainty weighs on spending decisions, it also spotted a similar trend in September, stating that brands have very little recovery scope in the face of the rising US Treasury yields and mortgage rates that could further cool economic activity.

Citi is not alone in noticing the downturn in consumer spending in the luxury segment.

Morgan Stanley analysts too spotted a similar trend in September, stating that brands have very little scope of delivering the long-awaited return ⁠to growth after two consecutive years of contraction.

The broking expects luxury groups to flag weaker US demand during the upcoming earnings season, which begins on October 12 when LVMH, widely considered a bellwether for ⁠the industry, reports third-quarter sales.

Gucci owner Kering will be releasing its earnings on October 22.

It has already told analysts to expect a slowdown in the US market, according to Italian broking Equita.