- Americans are spending more on experiences, which they were largely deprived of during the pandemic.
- Consumer spending on foreign trips and live entertainment rose by nearly 30% in 2023, WaPo reported.
- Meanwhile, the personal saving rate in the US has declined, falling to 3.6% in February.
During the earliest stages of the COVID-19 pandemic, many Americans reminisced about the things that used to bring them joy. They never stopped thinking about that last big trip with their families or that last in-person concert they enjoyed with friends.
Four years later, American consumers have mostly moved on from the pandemic and are spending more on experiences than ever before.
Prioritizing experiences, however, has led to a major shift in their financial lives: The personal saving rate in the US has declined considerably.
The Washington Post recently reported on how consumers in the US have embraced a sort of YOLO — or “you only live once” — mindset. In 2023, consumer spending on foreign trips and live entertainment rose by nearly 30 percent, according to the newspaper.
Spending levels have so far continued to rise in 2024, too. In February, personal consumption expenditures increased by $145.5 billion compared to January, with $111.8 billion spent on services, according to the Bureau of Economic Analysis.
At the same time, perhaps predictably, the US personal saving rate has declined, according to the bureau.
In February, the personal saving rate was 3.6 percent, a drop from 4.1 percent the month before. (The rate sat at 4 percent last November and 3.9 percent in December.)
Once consumers were able to spend freely on their wish list trips and attend concerts and festivals without onerous health restrictions, they started booking flights and hotel rooms and purchasing tickets to see the artists that they love.
So instead of continuing to put away money for the future, which is what many people tried to do in recent years, many consumers now want to make up for the time they lost during the pandemic.
“When you live through a crisis, it gets ingrained in your brain,” University of California at Berkeley behavioral finance professor Ulrike Malmendier told The Washington Post. “The official economic reports might say everything is coming back to normal, but we are different people than we were before the pandemic.”
Malmendier told the Post that after the Great Recession, many Americans overhauled their financial habits; many consumers started to save more of their money.
But the angst of Americans during the pandemic unleashed a different sort of sentiment, Malmendier said.
“The adverse effects of Covid weren’t necessarily financial; people got jobs quickly and the government stepped in with support,” he told the newspaper. “Instead, it’s about all of the things we were starved for: human interaction, socializing, travel. People are spending money on the things they missed most.”
