WSJ – “Americans Are Still Spending Like There’s No Tomorrow”

via WSJ:

• Americans spent more in August 5.8% YoY, far more than inflation at 4.0%.
• The experience economy boomed this summer. Airlines had record revenues and Ticketmaster had 18% YoY increase in ticket sales.
• According to the NY Fed, the share of households that said they made at least one large purchase in the previous four months increased to 64% from 57%
• “Normally at a time when you have higher inflation, but also higher interest rates, you don’t expect spending to hold up so well,” says Wilbert van der Klaauw, an economic research adviser on household and public policy at the Fed.
• Instead of saving for retirement or a home which seems out of reach, younger consumers are choosing to spend on experiences with a willingness to work longer.

Consumers should be spending less by now.

Interest rates are up. Inflation remains high. Pandemic savings have shrunk. And the labor market is cooling.

Yet household spending, the primary driver of the nation’s economic growth, remains robust. Americans spent 5.8% more in August than a year earlier, well outstripping less than 4% inflation. And the experience economy boomed this summer, with Delta Air Lines reporting record revenue in the second quarter and Ticketmaster selling over 295 million event tickets in the first six months of 2023, up nearly 18% year-over-year.