When Christian Dior introduced the New Look in 1947, France was still rationing sugar. When Chanel sent out an all– white blossom couture set in 2009, the financial world was mid–meltdown. And when Schiaparelli put a $19,000 lion head on Kylie Jenner during an inflation panic, no one at the atelier flinched. They weren’t responding to interest rates—they’re responding to legacy, archival bravado, and the kind of zero–friction economic ecosystem Coase could only dream of.
This isn’t about whether recessions are real (they are), or whether fashion reacts to sociopolitical shifts (it does). This is about how people collapse every tier of fashion into a single mood board of beige tailoring and “quiet luxury” TikToks—and expect that to explain global capital flows, consumer psychology, and thousand–euro price tags. It doesn’t.
The House of Dior is not your recession canary. Couture isn’t reactive. Couture is ceremonial. It is Coasean efficiency in symbolic form: no transaction costs, no frictions, no negotiations.
Couture houses know the gowns don’t make money—and they don’t need them to. The business model has always relied on cross–subsidization: runway shows generate cultural capital, which is then monetized through perfume, makeup, and accessory lines. This is why Chanel’s real moneymaker isn’t the tweed jacket—it’s Chanel No. 5. Dior’s 1,000–hour gowns survive because a hormonal boy buys Dior Sauvage Elixir—which sells every three seconds globally. Couture is there to create the dream that makes people buy the bottle. It’s less commerce, more ceremony.
But here’s the plot twist: on aura tout vu doesn’t even have a perfume line. No lipstick, no leather goods, no mid–market rollout. Yet they’ve shown couture consistently since 2002, often with absurdist creations worn by Madonna and Beyoncé’s backup dancers. They survive through licensing, costume commissions, jewelry, and sheer creative independence. They’re the anomaly that proves the rule: couture can survive outside the Louis Vuitton Moët Hennessy–Kering industrial complex, not because it’s profitable, but because its value lies elsewhere—narrative, craft, spectacle.
Couture doesn’t scale because it can’t scale. This is where William Baumol’s cost disease comes in: while productivity increases in tech and manufacturing, labor–intensive sectors (like fine arts and couture) can’t optimize without losing their essence. Iris van Herpen’s haute couture collections are the perfect case study: 3D–printed bodices, silicone filigree, robotic arm–spun textiles—and still, she requires hundreds of hours from human artisans to hand–assemble every look. Even the most tech–forward couture remains fundamentally artisanal.
According to McKinsey & Company’s 2025 State of Fashion (Luxury) Report, nearly 80% of luxury sector growth from 2019 to 2023 came from price increases—not volume. That’s not demand collapse. That’s vertical control. Hermès didn’t flood the market with more bags—they raised the price of the Birkin again. LVMH didn’t democratize access—they segmented it even harder. Lipstick indices were never built to account for hand-beaded organza. That would be like evaluating the Sistine Chapel by how many people can fit inside at once—that misses the point entirely.
The term “quiet luxury” exists partially to indicate many people don’t recognise what they’re looking at. It’s a label created to explain away the aesthetic codes of wealth to people who can’t recognize Margaux 17 by The Row. Quiet luxury is not about subtlety. It’s about fluency. For those who don’t speak the dialect and are expected to mistake understatement for modesty. A coat from The Row is not shy. It is $5,950 and tailored so precisely the hem could slit a wrist.
Nobel laureate and economist Paul Samuelson’s revealed preference theory argues that a consumer’s true desires are revealed not through what they say, but what they actually buy. It’s the same logic here: no one says they’re rich. They show you—with a camel coat, a lambskin bag that isn’t trending, and a pair of suede loafers that cost more than the median family’s rent.
So when people try to analyze “quiet luxury” as a political shift or recession trend, they’re usually just … outing themselves. They’ve mistaken recognition for ideology. They’re assuming restraint where there’s actually curation. They’re calling something “quiet” not because it is, but because they don’t know how to read it. Walk around any Ivy League campus and you’ll find Van Cleef Alhambra pendants layered over Brandy Melville hoodies and girls wearing Golden Goose to frats. These aren’t recession–era investments—they’re just status artifacts.
Recession–core loves to quote the lipstick index as if it’s gospel. The term was coined by Leonard Lauder (W ‘54) in 2001 as a marketing anecdote, not an economic model. It was never peer–reviewed, never replicated at scale, and only sometimes incidentally aligned with consumer data. It makes a cute story—but it’s not a theory.
Luxury doesn’t behave the way mass markets do in a downturn. It isn’t designed to.
McKinsey reports that the top 2–4% of clients are expected to drive 65–80% of global luxury market growth between 2023 and 2027. That’s not contraction—it’s consolidation. This is what economists call a K–shaped recovery: while middle and lower–income segments struggle post–recession, the ultra–wealthy bounce back almost instantly. And with them, so does luxury spending.
This is where Veblen goods come in—products whose demand increases with price because their value lies in their exclusivity. When prices rise, so does their appeal. The Hermès Birkin isn’t less desirable at $28,000—it’s more. That’s why during the post–COVID–19 inflation spike, LVMH and Kering saw record revenue increases—even while middle–class consumers were scaling back. Luxury remains indifferent to suffering; it was never designed for the struggling.
Then there’s third–degree price discrimination: the textbook economics strategy where brands sell different products at different price points to distinct consumer segments. A single fashion house will offer:
Couture: €100,000 and up
Ready–to–wear: €3,000 to €5,000
Perfume and makeup: $60 to $300
It’s not about democratizing luxury—it’s about building a tiered ecosystem. Most consumers only ever access the base layer, but they still participate in the fantasy.
Trying to interpret this system with tools like the hemline index—which argues that skirts get longer during recessions—is laughable. That theory first appeared in the 1920s and has been empirically inconsistent for decades to everyone from NASDAQ to Bloomberg. The 1997 Asian financial crisis didn’t usher in modesty—it brought micro skirts and Spice Girls platforms. The 2008 crash didn’t deliver austerity—it gave us Balmain FW09: military jackets, distressed mini dresses, and $10,000 crystal boots. Linen maxis are trending, and so are Miu Miu’s pelvically low micro skirts. If miniskirts and maxi skirts can both signal recession, the logic collapses. At some point, calling every trend a symptom of economic anxiety becomes its own kind of pseudoscience. It’s not analysis; it’s apophenia in a silk bias cut.
The real economic shockwaves aren’t hitting couture salons—they’re hitting midtier brands, resale platforms, and department store labels. These are the strata actually exposed to demand shifts and inflation pressure. Look at the collapse of Barneys, the gutting of Neiman Marcus, the restructuring of J.Crew, the boom and subsequent plateau of ThredUp and The RealReal. What we wear in a recession matters, but not all clothing is equally reactive, and not all markets operate on the same logic.
