Luxury Good Demand

Abstract

Luxury Good Consumer Trends and Advertising Spending Outcomes on the Economy This paper will explore how consumer trends in luxury goods affect the overall economy of the United States and vice versa. In economics, a luxury good is a good for which demand increases more than proportionally as income rises. Luxury goods are said to have high income elasticity of demand. In other words, as people become wealthier, they will buy more and more of the luxury good. Luxury goods are highly sensitive to economic upturns and downturns; therefore, the state of the economy will often shape consumer spending on luxury goods. However, consumer trends often fuel the economy as well. The demand for luxury goods creates jobs in manufacturing, advertising, event planning and many other areas of specialty that can contribute to a rise in GDP. An increase in exports due to a demand for American luxury goods would have a similar effect. The goal will be to discover any patterns in the data and perhaps to formulate an economic model that will expose the relationship between consumer trends in luxury goods and their effect on the economy.