Economic weakness and sliding asset valuations should have tamed the so-called ‘wealth effect’. However, demand for luxury goods has been surprisingly robust in recent months. Now, demand for acquiring luxury brands seems to be ramping up too.

Estée Lauder’s acquisition of Tom Ford International for $2.8 billion highlights this resurgence. The New York-based beauty already owns a vast portfolio of luxury brands, but this deal is its biggest one yet.

The acquisition was driven by the success of Tom Ford Beauty – the licensing agreement Estée Lauder signed in 2006. Sales in this segment grew 25 percent in the most recent quarter and the team expects it to generate net sales of $1 billion within a few years.

This isn’t the only luxury brand that’s still growing. Capri, Ralph Lauren, and Tapestry all reported sales growth in recent quarters. Overall demand for luxury goods rose 21 percent to €1.4 trillion ($1.45 trillion) this year, with an astounding 95 percent of luxury brands in the U.S. and Europe reporting positive growth, according to Bain & Co.

Consumers seem to be shrugging off inflation and declining wealth. Potential acquirers like Joann Cheng, chairman and CEO of Lanvin Group expect the trend to continue. “We have strong confidence in the resilience and outlook of the global luxury fashion market and the U.S., being the world’s largest luxury consumption market, is no exception,” he says. “This is especially true for brands with strong brand equity that have not penetrated the U.S. market, leaving plenty of room for growth.”

Only 15 percent of Lanvin Group’s revenue is derived from the U.S. Now the company is trying to boost its presence via a New York-based SPAC.

“Our European-based portfolio brands, such as Lanvin and Sergio Rossi, are all aggressively building or reinforcing their presence in the North American market with dedicated marketing campaigns and collaborations which have been hugely popular.”

The Lanvin Group recently raised $50 million in a private placement from South Korean investor Meritz Securities Co. Meanwhile, Chinese investors Challengers Capital and Youngor Group made an investment in New York-based Alexander Wang. Authentic Brands Group, which is also based in New York, acquired Britain’s Ted Baker for £211 million pounds ($254 million) as the brand is well-recognized in North America and could have significant growth opportunities here.

Capital flowing into North America as brands pull back from Russia and economic weakness persists in China could indicate a paradigm shift for the global luxury industry.

Vishesh Raisinghani