Despite a staggering $1.13 trillion in credit card debt, many Americans are still eager to indulge in travel and entertainment. This summer, however, the cost of having fun will be even steeper due to “funflation,” a term economists use to describe the rising prices of live events as consumers crave the experiences, they missed during the Covid-19 pandemic.
Matt Schulz, chief credit analyst at LendingTree and author of “Ask Questions, Save Money, Make More,” explains, “It’s hard to overstate the impact of the pandemic. It changed the way so many people view their spending, and the result is that people are more focused on the ‘right now’ than thinking about 40 years from now.”
According to the Bureau of Labor Statistics’ consumer price index (CPI), ticket prices for sporting events soared by 21.7% in May 2024 compared to the previous year, marking the highest annual inflation rate among the few hundred categories in the inflation gauge. Admission to movies, theaters, and concerts also saw a rise, though a more modest 3%.
‘Funflation’
Despite these rising costs, a significant portion of Americans remains undeterred. According to a report by Bankrate, 38% of adults plan to take on more debt to travel, dine out, and enjoy live entertainment in the coming months. Specifically, 27% of respondents indicated they would go into debt to travel this year, while 14% would do so to dine out, and another 13% would rely on credit to attend theater performances, live sporting events, or concerts.
“There’s still a lot of demand for out-of-home entertainment,” Ted Rossman, senior industry analyst at Bankrate, recently told CNBC. “Some of that reflects a ‘you only live once’ mentality that intensified during the pandemic, and some of that is because many economic indicators — including GDP growth and the unemployment rate — are in favorable shape.”
This trend is particularly pronounced among younger adults, especially Generation Z and millennials, who are more inclined to splurge on these discretionary purchases.
Living in the moment
Research by Bread Financial reveals that nearly two out of five Gen Z and millennial travellers have spent up to $5,000 on tickets alone for destination live events. Moreover, another Prosperity Index report by Intuit found that 73% of Gen Zers between the ages of 18 and 25 prioritize a better quality of life over having extra money in the bank.
As Americans continue to navigate the economic aftermath of the pandemic, the desire for memorable experiences remains strong, even in the face of mounting debt. The current trend underscores a significant shift in financial priorities, reflecting a newfound emphasis on living in the moment.
Source: The ‘funflation’ effect: Why Americans are spending so much on travel and entertainment this summer
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