Yet economists caution that such vigorous spending isn't likely to continue in the coming months. Many households have been pulling money from a shrinking pool of savings. Others have been turning increasingly to credit cards. And the additional savings that tens of millions of households amassed during the pandemic — from stimulus aid and reduced opportunities to travel, dine out and visit entertainment venues — are nearly depleted, economists say.
In the meantime, businesses, especially those in the sprawling service sector, are benefiting from what still appears to be pent-up demand, likely driven by higher-income earners, after the restrictions of the pandemic. Last week, Royal Caribbean Group robust quarterly earnings. Travelers crowded their cruise ships and spent more even as the company raised prices.
“We continue to believe that you shouldn’t bet against the consumer until actual job losses are on the horizon,” said Tim Duy, chief U.S. economist at SGH Macro Advisers., down from a peak of 9.1% in June 2022 — average wages are starting to outpace price gains. At the same time, the net worth of the richest one-tenth of households leaped by $28 trillion — or about one-third — from the first quarter of 2020 to the second quarter of 2023, according to the Fed. The poorer one-half of Americans gained a bigger percentage increase but in total dollars much less, from about $2 trillion to $3.6 trillion.
Some Americans, while keeping a close watch on their finances, still feel they have room to indulge themselves. Valerie Zaffina, a 74-year-old retired teacher who was picking up a piece of jewelry last week at a Kohl’s store in Ramsey, New Jersey. She said she and her husband live on fixed incomes and are cautious spenders.