Americans are spending like there is no tomorrow

Americans are spending like there is no tomorrow
Americans are spending big despite facing mostly depleted pandemic savings, a cooling labor market, and high interest rates and inflation.
The primary driver of United States economic growth is household spending. This remains robust as Americans spent 5.8% more than last August. This rate well outstrips the inflation rate of 4%.
Households that made at least one large purchase in the last four months increased from 57% last year to 64% this year which is the highest rate since August 2015 according to the New York Federal Reserve Bank.
The experience economy is booming. Delta Air Lines had record revenue in the second quarter. Ticketmaster sold over 295 million event tickets in the first half of 2023 which represents an 18% YoY. Ally Bank allows customers to create different savings buckets for different goals. There are over 1.5x as many buckets for experience orientated things like travel and fun in contrast to longer term planning.
Americans currently have a record amount of credit card debt. It totals over $1 trillion. The states with the highest credit debt are Connecticut, New York, and New Jersey. All three have average credit card debt of over $9,000.
While it is common for consumers to put short-term needs and goals above long term goals, the current circumstances are different in a number of ways. Americans are spending on once in a lifetime experiences due in part because of fears they may not have the opportunity to experience them later. People fear regretting not doing things like taking an overseas vacation or splurging on a big ticket purchase.
An article in the WSJ mentions one may who spent $1,600 on a Taylor Swift Eras Tour ticket and then about $3,500 on a bachelor party. A family of three spent $10,000 on a 10 night vacation in Hawaii at a 4-star resort. Another man lowered his retirement contribution so he could spend $7,000 on an Alaskan cruise. Then there is the story of a family that sold their home to travel the country with their two children.
Many consumers have given up the idea of ever owning a house. I’ve seen a lot of people discussing the idea of never being able to own a house, but I also think the idea of never being able to retire will also gain traction in the mind of many consumers in the years that come as people face economic uncertainty and high inflation and interest rates. Despite what politicians say, consumers remain frustrated about inflation. While it is true that inflation has fallen sharply in the past year, many Americans are deeply unhappy about the economy and often cite inflation as the primary reason. Prices for many things are well above their pre-pandemic price levels. The fact is that even though the inflation rate has come down, prices remain elevated and that weighs against consumer confidence.
Works Cited:
https://www.wsj.com/economy/consumers/americans-are-still-spending-like-theres-no-tomorrow-6a1d307?mod=hp_lead_pos1
https://www.wsj.com/economy/consumers/why-consumers-are-mad-about-inflation-even-though-it-has-fallen-ce39ca40?mod=hp_major_pos1#cxrecs_s
https://www.lendingtree.com/credit-cards/credit-card-debt-statistics/

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