Consumer Sentiment and Luxury Behavior in the United States before and after COVID-19: Time Trends and Persistence Analysis

Berta Marcos Ceron and Manuel Monge ()
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Berta Marcos Ceron: Faculty of Social Science, Universidad de Salamanca, E-37007 Salamanca, Spain
Manuel Monge: Faculty of Law, Business and Government, Universidad Francisco de Vitoria, E-28223 Madrid, Spain

Mathematics, 2023, vol. 11, issue 16, 1-14

Abstract: This paper analyzes the stochastic properties of consumer sentiment to understand how they affected the luxury sector in the United States before and after COVID-19. The results were derived using fractional integration methodologies and suggest that, before the pandemic episode, both variables were expected to be mean reverting and the shocks were transitory, having similar behavior. However, after the appearance of COVID-19, results suggest that consumer sentiment recovered before the luxury sector. Results from the use of cointegration methodologies show that the effects of COVID-19 disappeared in the short-run. Finally, the sentiment of consumers acts as a leading indicator of the behavior of the luxury sector according to wavelet analysis. Thus, an increase in consumer sentiment implies an increase of 3.6% in the luxury sector.

Keywords: luxury sector; consumer sentiment; fractional integration; FCVAR model; wavelet analysis (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
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