Americans are so upset about the economy they can hardly enjoy all their toys and cheesecake
Despite the current narrative that the economy is a top concern among voters, consumers sure are spending freely on movies, games, and booze.
We’ve said it before, but when it comes to assessing how Americans really feel about the economy, look at what they do, not consumer-sentiment surveys.
After all, Americans are increasingly unlikely to respond to polls.
Maybe that’s because they’re out shopping?
New numbers Thursday showed that inflation-adjusted consumer spending rose 3.1% in September compared to last year, the biggest annual jump since last December.
Digging into the details of the report, the financial strain on Americans becomes increasingly clear. Inflation-adjusted spending on booze rose 3%, the highest since last December. Wine was up 2.8%. They spent nearly 10% more on “games, toys & hobbies” than they did last year, and 44% more at movie theaters.
They spent 9.1% more on hotels and motels. And while spending at fast-food restaurants was down an inflation-adjusted 0.6%, spending at other restaurants was up 2%, the biggest jump since last November. Gambling, while down incrementally, is still hovering near never-before-seen highs.
Companies are seeing the same thing. Just yesterday there was a parade of incredibly rosy earnings reports from owners of salt-of-the-earth, sit-down restaurant chains like Brinker International — parent of Chili’s — and The Cheesecake Factory that sent both their stocks sharply higher, as did solid results for trip-booking website Booking Holdings.
This may come as a surprise, given the level of supposed concern about the health of the economy in this politically fraught season. (The economy is consistently spotlighted as the top concern among voters.)
To the extent that people’s complaint about “the economy” is that things cost a fair bit more than they used to, fair enough. Prices, as measured by the consumer price index, are up 21% from their level at the end of 2020. (The price rise in a comparable period between December 2015 and September 2019, before the pandemic hit, was just under 9%.) And prices for some major nondiscretionary monthly bills, like housing and electricity, have been especially sharp.
But the economy is more than just price increases, which, by the way, are quickly getting back to normal. (The Fed’s preferred gauge, released today, clocked in at just 2.1% year over year, almost bang on the central bank’s target.)
Plenty of other economically significant metrics — job creation, GDP growth, corporate profits, household wealth, heck, even stock-market performance — suggest the nearly $30 trillion mega tanker that is the US economy continues, for now, to steam ahead no problemo.
And even if they aren’t saying that to pollsters, the remarkably durable and strong spending of US consumers — which would turn sharply lower in an actual economic downturn — suggests that, deep down, Americans know that, too.
