What the Fine Art Market Crash Means for the Economy

Fine Art

Fine art sales have dropped this year, but what does it mean for the economy when the ultra-rich stop splurging? Photo: syolacan/Getty Images

After a record-breaking 2022, the fine art market has crashed harder than a Jeff Koons balloon dog sculpture knocked off its pedestal by a clumsy gallery-goer.

Driving the news: In the first five months of the year, overall global fine art sales have dropped by 14 per cent compared to the same time last year, while sales at the Big Three Auction houses (Sotheby’s, Christie’s and Phillips) dropped a whopping 20 per cent, per Artnet.

  • Sales of ultra-fine art (works priced US$10 million and up) saw the steepest drop, generating 51 per cent less revenue than last year as appetite for pricy pieces dried up.

Why it matters: A slumping art market could mean the ultra-rich are beginning to pull back their spending as the effects of tightening monetary policy take their toll. This could end up being a good thing, as well-off consumers can disproportionately skew inflation data.

  • Or it could be a really bad thing, as some economists think a slowdown in luxury spending could be a sign of an impending recession — known as the ‘lipstick effect.’

Zoom out: Major luxury brands like LVMH and Kering reported dwindling sales revenue last quarter, secondhand luxury watch prices recently hit near two-year lows, and (despite how much we love talking about them) super-yacht ownership is actually on the decline.

Bottom line: Recession indicator or not, when the ultra-rich are deciding that Picassos and Patek Philippes aren’t worth buying, it makes us want to double-check our budget.

—Quinn Henderson

This story was originally published by the money experts at The Peak [a ZoomerMedia property]. Get smarter about what matters. Sign up for The Peak, a free 5-minute daily email on Canadian business, tech and finance that you’ll actually enjoy reading.