Graduation Year

2026

Date of Submission

12-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Nishant Dass

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2026 Mehr Gupta

Abstract

The global luxury fashion industry is often viewed as a sector where broad economic conditions intersect with individual spending behavior. Yet despite this common assumption, it remains unclear whether macroeconomic fluctuations meaningfully shape luxury firms’ financial performance. This thesis examines the relationship between four key macroeconomic indicators - consumer sentiment, disposable income, unemployment, and exchange rates - and firm-level quarterly revenue for twelve publicly listed luxury companies from the early 2000s through 2024. Firm financial data from S&P Capital IQ are matched with macroeconomic measures from the Federal Reserve (FRED), and the analysis employs a two-way fixed-effects framework with firm and quarter controls, clustering standard errors by firm.

Across all model specifications, the findings reveal little evidence that short-run macroeconomic conditions systematically influence luxury firm revenues. Consumer sentiment, disposable income, and unemployment exhibit no statistically significant effects, even when allowing for up to three quarters of lagged response. Segment-level interaction models similarly show no meaningful differences between accessible and ultra-luxury firms, suggesting that demand for luxury goods is broadly insulated from macroeconomic fluctuations at the quarterly frequency. The only variable with consistent predictive power is the exchange rate: an appreciation of the U.S. dollar reduces reported revenue in the following quarter, reflecting currency-conversion effects rather than underlying changes in demand.

Overall, the results indicate that luxury firms display notable resilience to short-term macroeconomic cycles, with revenue largely driven by brand strength, global diversification, and firm-specific strategies rather than quarterly movements in consumer sentiment or economic conditions. These findings contribute to the growing evidence that luxury demand is structurally robust and less sensitive to cyclical macroeconomic pressures than commonly assumed.

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