Something unexpected is going on in the U.S. economy. Inflation remains high, yet many Americans went on a spending spree last month, eating out at restaurants and shopping for cars.
in January, the largest cost-of-living increase in four decades.
“We’re bullish on ’23,” says Silver, CEO of Affinity Solutions. “We think the spending rate will maintain itself. “People realized what they were missing during Covid,” says Steve Hill, CEO of the Las Vegas Convention and Visitors Authority. “I think it has driven a real energy around getting back to experiences. And we see, and I’m sure you do as well in the numbers, a shift from buying stuff to buying experiences.”
People shop at a Target store in Los Angeles where a sale sign is displayed for coffee pods on Feb. 13, 2023. Inflation has been easing since peaking last year, but it’s still sturdier than many economists had expected. “That’s just what my gut is telling me as an operator,” Mitchell says. “A year ago [people] knew we had to raise our prices. It was obvious and they were accepting of that. But the consumer is starting to change. I think people want inflation to come down and they are not as tolerant any more of price increases.”The Fed has been trying to get shoppers to slow their spending byEconomist Ian Shepherdson thinks the Fed’s efforts are working.
The economic lines are particularly zig-zaggy at the moment. Some, like the strong job market, point to continued growth in spending. Others, like the rising number of overdue car loans, point to a looming slowdown.
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