Americans are starting to pull back on travel and restaurants

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Source: Washington Post

Americans are starting to pull back on travel and restaurants

In a worrisome sign for the economy, U.S. consumers are beginning to spend less on services

By Abha Bhattarai
June 18, 2022 at 6:00 a.m. EDT

More Americans are beginning to hold off on booking flights, getting haircuts, building backyard pools and replacing old leaky roofs — in some of the new signs that the consumer engine of U.S. economic growth could be losing steam.

Over the past several weeks, households had already cut back on big-ticket purchase because of soaring prices, but in a worrisome twist, data suggests consumers are also beginning to tap the brakes on dining out, vacation plans and even routine services like manicures, hair cuts and home-cleaning appointments. Business owners around the country say rising prices, dwindling savings and concerns of a souring economy are taking a toll on household spending decisions.

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Consumer spending, which makes up more than two-thirds of the U.S. economy, has held strong through April even with inflation at historic highs. But there are growing signs that the spending streak could be ending.

Retail sales slowed last month for the first time this year, driven by a 4 percent drop in car sales. U.S. flight bookings dipped 2.3 percent in May from a month earlier, according to data from Adobe Analytics. And both high- and low-income Americans have begun pulling back, particularly on services, in the past four to six weeks, according to an analysis of credit card data by Barclays. The slowdown in spending is now concentrated in services, not goods, the bank found in a new analysis of credit card data.

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Read more: https://www.washingtonpost.com/business/2022/06/18/consumer-spending-slowing-economy/