Key takeout
- Americans are reducing travel expenses but are increasing spending at restaurants, according to American Express.
- Bank of America noted that this “consumer selectivity” often occurs during times of economic uncertainty.
People seem to be enjoying meals out more, but they’re holding back on travel quite a bit.
Recent comments from American Express indicated that while Americans are cutting back on travel, they’re willing to spend more on dining. This trend was highlighted in a conference call where it was revealed that Bank of America noted a change in consumer behavior.
American Express CEO Stephen Squeri mentioned that airfares and accommodation expenses were down for the second quarter, but dining expenses rose by 8% compared to the previous quarter, indicating a surprising steadiness among consumers.
An analysis from Bank of America showed that spending at restaurants increased by 2.1% year-on-year in June. Interestingly, while grocery spending remained pretty flat at just 0.1%, there is a notable interest in store-brand products among shoppers.
Recent retail sales data indicated a 0.6% uptick in spending at bars and restaurants, reflecting a willingness to spend on leisure despite earlier levels.
Signs of “consumer selectivity” in the economy
Bank of America pointed out that consumers are becoming more selective about where they allocate their money, particularly in the context of inflation. Their analysis suggests that some individuals, especially from lower-income households, seem to be opting for fewer but more significant experiences.
Airlines are noticing a decline in demand for their main cabins, typically where budget-conscious travelers book. Consequently, companies like Delta Air Lines and United Airlines are adjusting their capacities, focusing more on premium ticket sales.
During a recent conference call, major banks noted that consumers are generally faring well. However, some executives expressed concerns about credit card spending and the pressures facing lower-income households.
“We exist in a time of uncertainty, yet it seems that people are still trying to live their lives,” Squeri remarked. “What we’re observing now is consistent spending patterns, and we just have to adapt to this.”
