State of Consumer Spending Report: Goods + Services Diverge
Consumer spending has surprisingly held up in the past year — largely a result of increased prices — but also from strong consumption in certain categories. Here’s where consumers are cutting back and splurging.
📉 Goods spending is slowing
According to a Morning Consult survey, consumer spending fell a sharp 9.5% in March — echoed by year-over-year earnings reports from two companies this week:
- 📉 Box sales: Packaging Corp of America’s (NYSE:PKG) worse-than-expected results showed a 7.5% drop in revenue.
- 📉 Shipments: United Parcel Service (NYSE:UPS) said domestic package volume was down 5.4% in the first quarter.
Retail life hurts right now — unless you’re in high-end luxury, which continues to perform.
📈 Services spending is growing
Notably in travel — an area that continues to perform as shown from first-quarter earnings reports:
- American Express (NYSE:AXP) posted record spending volumes — with the travel and entertainment category rising 39%.
- Visa (NYSE:V) reported a 24% jump in cross-border spending — indicating a sharp increase in travel spending boosted by China’s reopening.
Big event coming next week: The Fed meets to announce the next interest rate hike — and everyone will be watching closely to find out if it’ll be the last one. 🙏