One of the most surprising by-products of the current speculative era has been the demand for luxuries accompanied by a widespread interest in ostentatious displays. Still, now there is an unfolding trend change underway.
The dictionary defines luxury as a "choice of something costly … something desirable for comfort or enjoyment." Nowadays, luxury goes way beyond that, and has been a kind of cultural mania.
The last few years mark one of the greatest consumer frenzies of all time. Unlike other times of wild fascination with luxuries when pretentious consumers purchased items on whims, "no matter the price," the belief currently is that a high price itself is what matters.
The extraordinarily high prices paid for some contemporary artists’ works are a further illustration of this period of conspicuous spending. An art critic wrote that those prices are all about "courageous and pointless overspending. We have reached a new level of absurd consumption."
A new book, How Luxury Lost Its Luster, stated that brand names and lofty price tags themselves, rather than quality, are the object of buyers’ obsessions, going on to claim that, "Luxury has come to mean something less than it once did." Yet, now The New York Times has written that there is, "suddenly a hesitation about splurging."
It appears then that there is beginning a backlash; against expensive goods. The Merrill Lynch Index of luxury goods indicates that there is pending a major decline in purchases of luxury goods.
Tastes are reflecting a fall in house prices and consumer confidence, so many are shifting to a less showy lifestyle. There is a reluctance to buy flamboyant items, which in any event are becoming less affordable.
A recent article in Toronto’s The Globe and Mail predicted that, "We are at the very peak of the luxury goods cycle … The prospects for a slowing of the global economy will put the brakes on expansion of luxury goods makers."
Luxury goods have soared in other eras, signifying the climax of a boom. In the 1920s the Western world went through a similar burst of enthusiasm, and there was a modest boomlet in luxury goods in the 1980s. However, what we have experienced in recent years far exceeds anything like those previous periods.
The factors that spurred demand for luxury goods have turned down, not only in North America but also in Europe and Asia. Evidently a seminal change, a touch of reality, is emerging in consumer markets.
