In the summer of 2021, Americans were looking forward to a “hot vax summer” and a flood of spending on eating out and travel. Then the Delta wave happened.
Almost a year later, it’s inflation’s turn to play party pooper.
Despite the pent-up demand for travel, dining and entertainment, many Americans aren’t planning to dramatically increase their spending over the next six months amid rising inflation.
About half of Americans, 53%, report they’re planning to “treat themselves” this spring and summer in a bit of celebration for many of the COVID-19 restrictions lifting and cases continuing to fall, according to a new CreditCards.com survey of nearly 2,500 U.S. Adults released Wednesday. But that’s down from the 66% of Americans who reported the same last year.
And for most, that planned reward won’t dramatically increase their spending. Nearly half of Americans, 47%, report they don’t plan on spending more on non-essentials such as travel, dining out, entertainment, clothing/accessories, electronics, and physical fitness in the next six months.
“Across the board, actually, we’re finding more of what I’ll call pragmatism this year,” Ted Rossman, senior industry analyst at CreditCards.com, tells Coins2Day. “People are being realistic about what they can afford.”
Rossman says that he expected to see a tremendous amount of people splurging this summer, so it was surprising to see so many Americans weren’t planning on upping their discretionary spending in the coming months. Inflation is a likely the main reason behind the hesitancy, he adds. In February, consumer inflation jumped 7.9% year-over-year, the fastest rate since 1982.
"There is a desire to return to some sense of normalcy, but I also think that some things are changing. Inflation is squeezing people," Rossman says.
There are, of course, going to be some people who want to finally go on a big international trip or spend their summer at concerts because they’ve been cooped up for two years and missed these activities, Rossman says. But you also have a lot of Americans who are being far more “circumspect” in light of inflation, he adds. “This may end up being the third straight summer of staycations for many families,” he says.
That’s especially true of lower-income households, the survey finds. Only 23% of those earning less than $50,000 a year plan to spend more on travel in the next six months, for example, compared to 48% of those making $100,000 or more.
“Across the board, actually, we're finding more of what I'll call pragmatism this year,” Ted Rossman, senior industry analyst at CreditCards.com, tells Coins2Day. “People are being realistic about what they can afford.”
“Lower income folks are a lot less likely to be splurging on these kinds of things,” Rossman says. And inflation is likely playing a major role in this decision. Typically lower income households have fewer areas to trim their budget when the cost of food, gas and housing increase because a majority of their spending goes toward these necessities instead of extras.
Although many Americans are planning to make rational choices about their spending in the coming months, Rossman says that doesn’t mean they can’t have fun. While Rossman says it’s important for Americans to continue to knock out debt like credit card balances and pay off ‘buy now, pay later’ purchases, people should try to carve out some “fun money” if they can.
“That budget is going to be different for everybody. But you can at least do some sort of staycation or regional trip,” Rossman says. “I think it is nice for people to get out and do something and not go into total deprivation mode. I don't think that's really healthy or sustainable.”
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