American spending habits are about to get real.
As vaccination rates increase in the U.S., so will people’s willingness to open their wallets. Nearly half (47%) of people polled by Charles Schwab
are keen to live large, and get back to their spending levels before the COVID-19 pandemic. What’s more, almost a quarter (24%) say they want to splurge and make up for lost time, the survey, released Wednesday, found.
The No. 1 on people’s spending lists? Getting the hell out of dodge, and hanging out with family and friends. The Schwab 2021 Modern Wealth Survey concluded that Americans are dreaming most about traveling (40%), socializing (30%), taking an extended vacation (24%), dining out at upmarket restaurant (21%) or throwing a party for family and friends (15%).
“Many are starting to see the light at the end of the tunnel,” said Jonathan Craig, head of Investor Services, Charles Schwab. Indeed, a majority of Americans (54%) reported having gone out to eat over the past week, according to the latest Axios-Ipsos Coronavirus Index, marking the first time in more than a year that more than half of respondents have reported doing so.
Exhaling after a year of being at home, people just want to get away.
Like the Charles Schwab survey, the index also said people just want to get away. Nearly six in 10 said they’ve visited relatives or friends over the past week, another record high for the survey. Majorities of both vaccinated and unvaccinated Americans are engaging in these activities, according to the poll, which surveyed 1,078 U.S. adults between May 7 and May 10.
After more than a year of quarantine and illness, people are ready to exhale. “We’re also seeing a healthy balance — even as many people are eager to get out to spend, they also want to nurture newfound, healthy savings and investing habits developed over the last year, and it seems that will be an ongoing marker of this next chapter,” he said.
There has been a substantial decline in credit-card balances in the first quarter of 2021. “However, surging retail sales volumes suggest that a combination of stimulus checks, increased consumer confidence, and pent-up demand are both supporting consumption and also helping borrowers reduce revolving debt balances,” said Andrew Haughwout, senior vice president at the New York Fed.
But they also face rising student-loan, auto-loan and mortgage debt, which could put a dent in people’s willingness or ability to finally see some sights beyond their zip code. Student debt rose by $29 billion to $1.58 trillion in the first quarter. The Dow Jones Industrial Average
the S&P 500
and the Nasdaq
were all lower Wednesday.
People face significant headwinds as they finally break out of isolation.
Indeed, millions of people face significant headwinds as they finally break out of isolation, and start feeling more confident about the economy. The economic environment during the coronavirus pandemic strained their finances (31%), while 26% faced a salary cut or reduced hours, and 20% said they were laid off or furloughed, the Charles Schwab survey said.
Many Americans will likely be hit by higher prices if/when their spending gains momentum. Consumer prices rose sharply in April, with the rate of inflation hitting 4.2%, up from 2.6% in the prior month — the highest level in nearly 13 years, signaling greater stress on the economy as businesses grapple with supply shortages. Exhibit A: used-car prices.
One wrench in Americans’ desire to travel by plane or car: Retail gas prices just topped $3 a gallon for the first time in more than six years, according to GasBuddy. The national average price for regular unleaded gas was at $3.02 a gallon. Gas prices have been ticking up after the Colonial Pipeline ransomware attack, although that has affected some parts of the country more than others.
What’s more, the economic recovery reveals two very different Americas. The latest jobs figures showed a stark divide among workers, both in their ability to get jobs and hang onto them during the pandemic. While critics have said Americans are staying home because of enhanced unemployment benefits, the official U.S. unemployment rate rose again in April to 6.1% from 6% the previous month.
Still, there are signs of normality, or a new normal, returning. On Wednesday, Broadway star Patti LuPone said Steven Sondheim’s “Company” was 10 days from opening on Broadway last year when the show was suspended. It will begin previews on Dec. 20. In a video on Twitter
she said, “Welcome back to Broadway, and when we’re together again it will be one hell of a show.”