Never Ending Revenge Spending—‘What Is the New Norm?’

livemint.com:

Americans are continuing to spend, despite anxiety over the economy, making companies question their expectations of consumer spending habits during slower economic growth. Shoppers are stretched, but discretionary spending isn’t abating as quickly as some finance chiefs and economists expected—a phenomenon economists and finance chiefs have coined “revenge" and even “doom" spending.

And it has CFOs across industries—from travel to clothing, restaurants and consumer packaged goods—working to figure out what the impact is on balance sheets. Americans—for now—remain resilient and are holding on to some nice-to-have experiences and habits, and are willing to even spend on small and large extravagances, even while grocery prices soar, pandemic-era savings dwindle and credit is more expensive.

“This long-anticipated slowdown that economists and business leaders have been anticipating just isn’t materializing yet," said James Knightley, chief international economist at financial services provider ING. “And I think it’s a signal that consumers are wanting to maintain their lifestyles as long as they can." The pandemic changed what motivated people to spend.

Shoppers emerging from the pandemic with money to burn were eager to splurge, and this so-called revenge spending drove people to Taylor Swift and other concerts and led them to take trips and buy designer handbags. This boosted some companies’ profits as living in the moment took priority over saving for a home or rainy day.

Economists are starting to see some signs of consumers pulling back, with U.S. retail sales rising a seasonally adjusted 0.6% in February compared with a month earlier, recent Commerce Department data shows, which wasn’t as robust as some were hoping.