Record numbers of young adults living at home with their parents are helping drive the boom for luxury goods in the US and UK, according to Morgan Stanley (NYSE:MS).
Analysts at the broker led by Edouard Aubin pointed out that the recent US census data showed that nearly half of all young adults ages 18 to 29 are living with their parents, the highest level since 1940.
This trend has benefited discretionary spending and is partly responsible for the surge in popularity of handbags, watches and jewelery, they said.
“When young adults free up their budget for daily necessities (eg rent and grocery), they simply have more disposable income to be allocated to discretionary spending,” the Morgan Stanley (NYSE:MS) report said.
The luxury goods market is in rude health with a study last month estimating that the global luxury market would grow by 21% in 2022, reaching €1.4 trillion with the personal luxury goods market is expected to show accelerated growth of 22% to €353 billion.
The 21st edition of the Bain & Company–Altagamma Luxury Study forecast that the personal luxury market would see further growth of at least 3% to 8% next year, even given a downturn in global economic conditions, and by 2030 the market value is expected to climb to around €540 billion to €580 billion, a rise of 60% or more compared to 2022.
Generational trends are a powerful driver, with 'Gen Y' and 'Gen Z' continuing to lead the growth this year, and spending by Gen Z and 'Gen Alpha' set to grow some three times faster than for other generations until 2030, by when they will make up a third of the market, the report suggested.