Just about everything in the U.S. — from cars to hotels to groceries — is more expensive these days.
According to the most recent data, August’s Consumer Price Index increased 0.6% — the largest of 2023.
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Here’s a breakdown of what’s pricier over the last 12 months, according to the CPI:
- Food: increase 4.3%
- Electricity: increase 2.1%
- New vehicles: 2.9%
- Apparel: 3.1%
- Medical care commodities: 4.5%
- Transportation: 10.3%
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Not to mention the fact that fewer people are saving, and those who are saving are saving a lot less of their hard-earned dollars. In April 2020, the median personal savings rate, or how much a person put away of their after-tax pay, was over 33%. As of 2023, that rate has dropped to an average of just above 4%.
Since everything from clothing to a cab costs more over the last year and folks are socking less money away, you may speculate that those people might be going out a lot less, choosing not to travel, and cooking meals at home.
And you would be dead wrong.
A recent study reveals that Americans are actually splurging — a lot — when it comes to treating themselves.
Americans are spending more compared to the year prior
Despite life being more expensive and interest rates higher now than they were a year ago, Americans spent 5.8% more than they did in August 2023, according to the most recent data.
And with a surge in revenge travel and concert tickets at record prices this summer, it’s pretty easy to get an idea of where that extra spending is going.
Delta Air Lines (DAL) – Get Free Report, for example, reported Q2 2023 earnings at the end of June. And to investors’ delight, reported a record $15.6 billion in operating revenue and a net income of $1.83 billion.
“Premium travel is the number one priority for the consumers that we target. They’re [travelers are] not interested in buying houses or cars or boats or electronics, but they are interested in traveling,” CEO Ed Bastian said on the earnings call.
They’re interested in going to exciting places — and seeing exciting things. Concert and event ticket purveyor StubHub is also having quite a year, recording what it calls a “record breaking concert sales worldwide” as some of the biggest names in entertainment, like Beyonce and Taylor Swift, went on tour during the warmer months.
“We’ve never seen a summer like this in our history and we can, without a doubt, contribute this to Taylor Swift and Beyoncé. We are seeing the top female artists commanding higher ticket prices – the average ticket price for top female artists right now is $660, compared to $245 for top male artists,” Stubhub spokesman Adam Budelli said.
And consumers are willing to shell out that kind of money, whether they have it or not.
Personal finance tracker PYMNTS found that 21% of consumers that live paycheck-to-paycheck blame nonessential spending for their budgetary lifestyle — but fully two thirds of them continue their spending behavior even if it reduces their savings capacity.
And the things they’re spending on aren’t exactly gifts for loved ones or down payments on houses. 43% of folks living paycheck-to-paycheck and struggling to pay their bills are spending their money on leisure or travel services, according to PYMNTS.
“Financial distress is not a strong differentiator in who spends on such services as leisure or travel and personal services,” PYMNTS writes, adding, “Whether living paycheck to paycheck or not, consumers remain engaged with dining out, retail purchases and household digital services.”