Despite high prices, pandemic-weary Americans are likely to spend this Memorial Day
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The personal consumption expenditures index, a key measure of inflation, was up 6.3% in April from a year earlier, according to the Commerce Department, which released the data Friday. That means lots of Memorial Day staples are more expensive than before. But it hasn’t kept people from buying them.
That was clear from the celebratory vibe this weekend at Fort Greene Park in Brooklyn, New York, where lots of people were gathered to barbecue. One group had a DJ; another, balloons. Adonis Reef and his girlfriend, Mahogany Stephens, were at their own picnic table, grilling jerk chicken and a T-bone steak. Stephens admired the meat as it sizzled on her portable grill.
“And that’s a recession steak, just saying. That’s a steak that’s hard to come by,” she said.
Stephens calls it a recession steak because it cost so much, it feels like we’re in a recession — even though it’s technically not the case. Beef and veal prices are up more than 16% from last year, according to the PCE price index. Other barbecue necessities, like propane (up more than 26%, according to the most recent consumer price index) and festive T-shirts (clothing is up more than 6%, according to the PCE), have increased too.
But Stephens was keeping it in perspective. “Everything is highly expensive. It definitely is, but … I got it. That’s all that matters, you know?” she said.
Stephens, who’s 26, has a job as a caretaker of the park. She was barbecuing Sunday so she could work Monday and earn extra. Her boyfriend, Reef, is 30 and works in a grocery store. Both of them watch prices closely. But it’s been a long pandemic, and they were ready to enjoy themselves.
“If we have extra, and we can sit down and spend on that, why not?” Reef said.
Lots of Americans share that attitude. Consumer spending was up nearly 1% in April from the month before, according to the Commerce Department.
Ethan Harris, head of global economics for Bank of America Global Research, said there are a few things supporting that: Lots of people have jobs, and they’ve been saving.
“In the last two years, you had a lot of government transfers that supported household incomes,” Harris said. “A lot of that money wasn’t spent because people were unable to spend at normal levels on services. So they simply left it in the bank.”
There’s also a lot of pent-up demand, according to Robert Frick, a corporate economist with Navy Federal Credit Union, which has over 10 million members.
“People are saying, ‘All right, at least for this summer, we’re going to travel, we’re going to have fun, we’re going to be with friends.'”
But he pointed out that inflation disproportionately affects people with less money.
“We are starting to see among our members, but they reflect the country in general, that people of lower incomes are really starting to feel a lot of financial pressure,” Frick said.
Back at Fort Greene Park, another picnicgoer, Maegan Harris, was philosophical about the state of the economy. She said prices are high right now, but they’ll eventually go back down.
“It is what it is,” Harris said. “Then, when it’s all over, we all can have a little more money in our pockets, I guess. I mean, what else can you do?”
With no one certain how long high inflation will last, that question is front and center for many politicians, businesses and consumers.
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