Americans may be implementing some budget cutbacks when it comes to… fun.
The latest Discretionary Spending Survey from Bankrate say 54 percent of Americans plan to cut back on their spending for frills, like eating out, entertainment or travel.
Last year only 49 percent of us had such plans to economize.
But do we really mean it?
“I take this with a healthy grain of salt,” cautioned Bankrate Senior Industry Analyst Ted Rossman. “Despite gloomy consumer sentiment, people are actually spending more than they care to admit, including these extras.”
Rossman says “experience” expenditures, for trips, concerts, a night on the town, spiked as covid restrictions waned and the expectation had been for that spending to die back down, especially with any nervousness over the economy. Instead, he says, consumers have continued to splurge, as long-term big-ticket investments have seemed out of reach. “A lot of young adults are delaying traditional milestones like getting married and having kids,” he said, “but at least they can still go on the trip. At least they can still go to the music festival or the hot new restaurant.”
Rossman also worries that those fun budgets may be straining Americans’ finances if they charge those costs on credit cards, which have carried increasingly stiff interest rates.
“If you’re financing this at 20% for years and years, that’s very expensive. A better choice might be to be flexible about travel planning. Maybe drive instead of fly. Travel in off-season or shoulder season.”
With consumer debt still at precarious levels, Rossman sees promise in strong employment numbers, as long as Americans exercise more caution with their spending.
“Consumer spending is keeping the economy chugging along,” he said. “I just wonder at what cost at a personal level.”
Photo: Maskot