American Consumers Keep Spending, Tilting Toward Experiences Over Goods

American consumers continue to spend at a steady clip, defying predictions of a pullback, with the money increasingly flowing toward experiences such as travel and dining rather than physical goods.

The shift reflects a rebalancing after the pandemic years, when spending on goods surged while services were constrained. With those constraints long gone, households have tilted back toward experiences, a preference that has proven durable.

Where the money goes

Restaurants, travel, and entertainment have seen sustained demand, while categories like furniture and electronics that boomed earlier have cooled. Retailers have adjusted, leaning into services and experiences where they can.

The resilience rests partly on a solid job market and real wage gains as inflation eased. Lower-income households, however, remain more stretched, and signs of caution have appeared in some data, from rising reliance on credit to trade-downs at the grocery store.

A watchful eye

Economists watch consumer spending closely because it drives the bulk of the economy. So far, the picture is one of steadiness rather than exuberance, a consumer who is spending but also, in places, showing prudence. That balance has helped keep growth on track.