After two years of spending heavily on vacations and other experiences that they were deprived of during pandemic lockdowns, Americans may be on the brink of pulling back — a cool-down that could help slow inflation.
The nation witnessed two years of red-hot “revenge spending,” the name economists and corporate executives gave to a spike in recreational spending that followed coronavirus lockdowns. As demand rose, so did prices for airfares, hotels and other sought-after services.
But many of those price categories are now cooling. Hotel prices have recently climbed much more slowly on a year-over-year basis, and airfares are flatlining. If that trend continues this summer, it could contribute to a slowdown in overall services inflation, something the Fed has been watching and waiting for.
“We see some slowing in so-called revenge categories,” said Yelena Shulyatyeva, senior U.S. economist at BNP Paribas.
Post-Pandemic Spending on Hotels and Travel May Be Cooling Down
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