Even With High Inflation, Americans Are Spending More on This
- Inflation is at 9.1%, the highest level since November 1981.
- Despite higher costs, Americans increased their spending on foreign travel by 90% from January to June of this year.
- The biggest spending increases have been on travel and recreational activities, while the biggest declines in spending have been on big-ticket items such as recreational vehicles and home renovations.
Americans are spending more on travel due to pent-up demand.
Despite the fact that inflation is now at 9.1%, it hasn't stopped Americans from spending big on travel. The U.S. Bureau of Economic Analysis publishes monthly how much Americans are spending in each category. From January 2022 to June 2022, Americans spending increased by 3.8%. The biggest increase in spending is foreign travel by U.S. residents, with about a 90% increase since the beginning of the year.
Pent-up demand for travel and recreation
The biggest personal spending increases this year have all been for travel and recreation. Air and rail travel spending have shot up by 44.24% and 82.87% respectively. More Americans are also going out, with visits to a movie theater soaring by 67.22% and spending on live entertainment (excluding sports) up by 43.57%.
Other travel and recreational-related personal expenditures that have soared this year include:
- Gasoline and other motor fuel: 38.44%
- Public transportation: 35.05%
- Admissions to specified spectator amusements: 20.97%
- Hotel and motel stays: 19.92%
- Water transportation: 18.88%
- Parking fees and tolls: 18.74%
- Motor vehicle rentals: 17.28%
- Taxicabs and ride-sharing services: 16.13%
- Package tours: 12.40%
Drop in demand for big-ticket items
While people have been splurging on going out, the biggest drops in spending this year have been for big-ticket items such as boats, new and used vehicles, motorcycles, and home renovations. These expenditures saw the largest decrease from January to June of this year:
- Pleasure boats: -28.07%
- Sports and recreational vehicles: -15.22%
- New foreign cars: -15.71%
- Funeral and burial services: -13.73%
- Pleasure aircraft: -13.33%
- Motorcycles: -13.32%
- Photo studios: -11.25%
- New domestic cars: -9.59%
- New light trucks: -8.62%
- Motor vehicle leasing: -4.18%
- Repair of furniture, furnishings, and floor coverings: -4.01%
- Financial services: -3.95%
- Financial service charges, fees, and commissions: -3.94%
- Repair of household appliances: -3.27%
- Carpets and other floor coverings: -2.63%
Financial service fees and commissions also decreased this year, most likely due to the drop in the stock market.
Personal expenses greater than personal income
Meanwhile, the growth in personal income has stayed relatively flat, growing just 0.6% per month this year. Personal expenses however have grown by twice that amount, increasing 1.1% from May to June, or an increase of $181.1 billion. Spending on gas, other energy needs, and for health care, housing, and utilities (mainly housing) were the leading contributors to the increase.
Families may be cutting back on big-ticket items due to inflation, but there is no sign that spending on travel will decrease in the near future. The data doesn't take into account one of the biggest travel periods of the year, the 4th of July weekend. July and August are also one of the busiest travel months. Even with higher travel costs, Americans are releasing their pent-up demand for travel after COVID-19.
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