Consumers Splurge on ‘Once in a Lifetime’ Expenses Despite Inflation

Household spending is up despite several factors that should be keeping it down.

Americans spent 5.8% more in August compared to the year before amid a boom in “experience” spending, The Wall Street Journal (WSJ) reported Monday (Oct. 2). Delta Air Lines reported record revenue, while Ticketmaster’s sales were up almost 18%.

Meanwhile, inflation and interest rates remain high, and there is an ongoing decline in the savings cushion many people built up during the pandemic.

Still, the report said a tough housing market has led consumers to scrap plans for their first home. And COVID illustrated how fleeting long-term plans can be. The realization has led consumers to spend on “once-in-a-lifetime” experiences they worry they won’t get to do in the future.

“It’s not a regret-filled, spur-of-the-moment decision,” Michael Liersch, head of advice at Wells Fargo, told WSJ. “It’s the opposite of that, where I would regret not having done it.”

He added that it’s too early to tell whether this spending pattern is the new normal or a one-off.

PYMNTS Intelligence found that consumers still engage in nonessential spending, even as it contributes to their paycheck-to-paycheck lifestyle.

More than 60% of consumers live paycheck to paycheck, and 21% of them said nonessential spending is a reason for their lifestyle. One in 10 of these consumers said it is the main reason.

Splurging can come in many forms, with food purveyors saying consumers are still spending on small luxuries as their ability to buy larger nonessential items wanes.

“Chocolate and Salty Snacks rank as two of the top-three resilient treats that consumers are not willing to forgo,” Hershey CEO Michele Buck said during an earnings call earlier this year.

Among consumers who can afford it, splurging looks a bit different. The WSJ report gave the example of Candice and Jasmine Kelly of North Carolina, who set aside a few hundred dollars from each paycheck to spend on rewards like high-end restaurants and designer handbags.

“All the rules that exist around money and lifestyle are just things people made up, so we’re playing a different game, and honestly I think we’re having more fun,” said Candice Kelly, per the report.