The US economy, which accounts for over 55% of global diamond jewellery demand, is projected to slow in GDP growth in the coming year. Despite the deceleration, long-term correlations between economic productivity and diamond jewellery sales signal optimism for the market’s recovery.
Economic Outlook and Market Variables
Forecasts from the International Monetary Fund (IMF), World Bank, and Organisation for Economic Co-operation and Development (OECD) suggest that U.S. GDP will grow by 2.2% in 2025. This marks a decline from the estimated 2.8% growth in 2024 and 2.9% in 2023. In October, the IMF attributed this slowdown to tighter fiscal policies and a cooling labour market. However, recent U.S. election outcomes could reshape macroeconomic variables.
In November, Republicans, led by Donald Trump, regained control of the White House, Senate, and House of Representatives. Trump’s agenda includes protectionist policies such as stricter immigration enforcement and aggressive tariffs, which are expected to exert short-term inflationary pressures. Conversely, proposed measures like relaxed domestic energy policies and reductions in government spending may have deflationary effects.
The U.S. Federal Reserve has also adjusted its stance, cutting interest rates by 0.25% in November—the second consecutive cut following a series of aggressive hikes in 2022 and 2023 aimed at curbing post-pandemic inflation. Current projections suggest further rate cuts totaling 1% by the end of 2025, aligning interest rates with inflation estimates and signaling a return to more balanced monetary policy.
Consumer Sentiment and Spending Power
As of late 2024, the U.S. unemployment rate stands at a stable 4.0%, while inflation has moderated to approximately 3%, a significant drop from its 2021 peak of 7%. These trends have buoyed consumer sentiment, particularly among demographics inclined to purchase jewellery. Stock and cryptocurrency markets, both at all-time highs, further bolster discretionary spending power heading into 2025.
Jewellery Market Dynamics
Diamond jewellery sales in the U.S. are projected to decline by a mid-single-digit percentage in 2024, following a high-single-digit drop in 2023. However, these decreases set the stage for easier year-over-year comparisons in 2025. Additionally, many jewellers have cleared excess inventory, much of which was priced during inflationary peaks, paving the way for a less promotional and more profitable retail environment.
Post-pandemic recovery in the engagement and bridal segments continues to provide a tailwind for the market. Public retailers such as Signet Jewelers and Brilliant Earth have reported sustained, albeit slower-than-anticipated, growth in these categories. Historically, bridal jewellery accounts for 30% to 50% of diamond demand in the U.S., underscoring its critical role in the sector’s resurgence.
Strategic Insights
Zimnisky, speaking at the Bharat Diamond Bourse in Mumbai in October 2024, emphasized that 2025 offers a unique opportunity for the U.S. diamond market to regain momentum. “The combination of macroeconomic stability, reduced inventory pressures, and continued recovery in bridal demand positions the industry for a strong comeback,” he noted.
As the market approaches the new year, a convergence of economic and industry-specific factors is poised to restore confidence and drive growth in the U.S. diamond jewellery sector.
