With prices across the economy — from food, gas and rent to cars, airfares and hotel rooms — soaring at their fastest pace in decades, you might think Americans would tap the brakes on spending.
Still, several trends are driving Americans' spending, including rising pay, savings amassed during the pandemic and a rebound in credit card use. Those savings and continued wage gains, economists say, could fuel healthy spending throughout this year.
Southwest Airlines has said that surging demand for air travel will keep it profitable through this year. Though average fares jumped 32% in the first quarter from a year earlier, the carrier said it's seen no sign of curtailed demand.For many people, the opportunity to travel after two years of restrictions is outweighing the financial pressures of higher prices.
To save on gas, Mike Dyslin said they've been driving their Toyota Prius more than their SUV but otherwise haven't made major changes in their spending habits. for its store cards after a year in which customers made sizable payments. Higher levels of card debt raise the risk of increased delinquencies.Dan Gabel, a musician in Millbury, Massachusetts, has pared his entertainment spending as costs have soared far beyond what he earns.
A surprisingly large portion of workers, though, are receiving pay gains that exceed inflation: About 45% did so in March compared with a year earlier, according to research by the Indeed Hiring Lab.
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