Consumers are spending less due to inflation and economic concerns

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More Americans are starting to put off booking airline tickets, getting a haircut, building backyard pools and replacing old leaky roofs are some of the new signs that the consumer engine of US economic growth may be losing momentum.

Households have already cut back on large purchases over the past few weeks due to price spikes, but worryingly data shows consumers are also starting to slow down at restaurants, vacation plans and even routine services like manicures. haircuts and house cleaning. Business owners across the country say rising prices, shrinking savings and fears of a worsening economy are weighing on households’ spending decisions.

At Olentangy Maids in Columbus, Ohio, more customers are postponing or canceling their house cleaning appointments. Some regulars are trying to negotiate lower prices, while others have stopped tipping altogether, co-owner Keith Troyer said.

“It wasn’t a massive drop, but enough to make it noticeable,” Troyer said. “Many clients called and said: “Hey, my wife got fired. We need to cancel,” or “Can I switch from bi-weekly to monthly?” This has hardly happened before this month.”

Consumer spending, which makes up more than two-thirds of the US economy, remained high through April even with historically high inflation. But there are growing signs that the spending streak may be coming to an end.

Retail sales slowed last month for the first time this year due to a 4% drop in auto sales. U.S. flight bookings fell 2.3% in May from a month earlier, according to Adobe Analytics. Both high- and low-income Americans have begun cutting spending, especially in services, in the last four to six weeks, according to Barclays analysis of credit card data. The spending slowdown is now focused on services rather than goods, the bank found in a new analysis of credit card data.

“Throughout 2022, the narrative has been that as COVID disappears, households will increase spending on services,” Barclays analysts wrote in a note this week. “And indeed, that narrative has been true for most of this year. But… service costs seem to be slowing down considerably.”

Spending on services such as travel and restaurants, which rose more than 30 percent this year compared to 2021 figures, has now slowed by half, according to Barclays analysis.

Simis salon customers in Fairfax, Virginia, are starting to save in a new way. According to owner Ahmet Sim, clients who used to come every four weeks now have a 12-week break between appointments. Others are bargaining for lower prices or opting for a partial treatment instead of allocating everything. Overall sales are down 20 percent from last year. The average tip also dropped from 20% to 10%.

“Literally in the last month, I began to notice that clients are trading like crazy,” Sim …

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