Inflation is soaring and recession fears are growing, but young Americans plan to live life to the fullest this summer, even if they have to dip into their savings or run into debt.
After more than two years of Covid-related restrictions, Gen Z and Millennials are more likely than their older counterparts to travel this summer, spend more on those trips than in previous years, and incur credit card debt , according to a Verasight survey commissioned by Bloomberg News.
“There is this need to get out and have fun after two years of confinement,” said Jennifer Lee, senior economist at BMO Capital Markets.
Take Michela Tarantolo, who just graduated with a degree in marketing from Creighton University in Omaha, Nebraska. The 22-year-old said her college experience had been bifurcated by Covid, with two years of fun followed by two years of pandemic-induced caution.
That’s why she and three of her best friends spontaneously bought tickets to see their favorite band, 5 Seconds of Summer, in Chicago in July. The women will share a car and three nights in a hotel room, bringing the total cost to around $350 each.
“I’m just excited to have experiences back,” she said. “The experience of going out and doing something outweighs the expense. I’m more willing to spend money on experiences because now we know some things can change in moments.”
According to the Verasight survey, which surveyed 1,521 adults in early May, around two-thirds of millennials (69%) and Gen Z (65%) plan to go on vacation this summer, outpacing Gen Xers and baby-givers. boomers. They are also more likely than their older counterparts to spend more on vacations this summer than in previous years.
These expenses come at a time of growing economic uncertainty. Consumer prices rose 8.3% in April, among the highest readings since the early 1980s, and airfare and hotel prices both rose. To make matters worse, the odds of a recession next year are steadily increasing.
However, the economy, and in particular the labor market, remains solid for the time being. The unemployment rate for Americans aged 25 to 54 is the lowest since 2019, and that of 16 to 24 year olds is the lowest since February 2020, just before the pandemic hit. A record 4.5 million Americans quit their jobs in March, suggesting workers are confident they can easily move on to a new job.
Meanwhile, many Americans have been able to increase their savings over the past two years, with younger Versaight survey respondents more likely to say their savings have increased during the pandemic. This was especially true for Millennials (51%) and Gen Z (49%).
Those who don’t have the savings to pay for their summer of fun may instead go into debt. Younger generations are more likely to have bigger bills this year, the survey finds, with 27% of Gen Z and Millennials reporting higher credit card spending than in 2021, compared to 16% of Generation X and only 11% of baby boomers. .
A record 537 million credit card accounts were opened in the first quarter of 2022, a jump of 31 million from last year, according to data from the Federal Reserve Bank of New York. And the nation’s biggest banks said credit card spending rose in the first quarter as customers resumed traveling and dining out.
Emmanuel Nwana, 25, is spending two weeks in Europe this summer with two of his friends. The nuclear medicine technologist from Washington, DC, has spent the past two years locked up in his home or the hospital where he works. He agrees that his tour through Portugal, Spain, Croatia and Poland costs more due to inflation. To afford it, he reduces his expenses by not going out as much and buying only the things he needs.
“It’s not fun that everything is more expensive, but to some extent, after being in the locked house for two years, you kind of have to live your life and bite that bullet,” Nwana said. “I’m sacrificing things to be able to take this greatest journey – I can’t wait to forget about everything for a few weeks and switch off life.”
–With help from Molly Smith and Akayla Gardner.
This article was provided by Bloomberg News.