The ‘funflation’ effect: Why Americans are spending on travel and entertainment

The ‘funflation’ effect refers to the current trend amongst Americans where they are opting to spend more on experiences, such as travel and entertainment, instead of traditional material purchases. This shift in expenditure patterns can be attributed to a variety of reasons.

Firstly, after spending much of 2020 and 2021 under lockdown due to the COVID-19 pandemic, many Americans are now eager to go out and experience things again. With vaccine rollouts, there is an increased confidence in travelling and attending events, leading to a spike in such expenditure.

Secondly, there has been a cultural shift towards valuing experiences over material possessions. This mindset, particularly popular amongst millennials and Gen Z, places a higher emphasis on creating memories and having unique experiences. There’s an understanding that experiences contribute more significantly to personal growth and happiness than material possessions.

Thirdly, the rise in remote work allows people more flexibility in their location and hence they are travelling more. Trips no longer have to be confined to annual vacations and can happen more frequently.

Lastly, people are looking to make up for lost time or celebrate occasions that had been postponed due to the pandemic.

While this trend increases consumer spending in the travel and entertainment sectors, there is also an inflation aspect as high demand leads to increased prices. Despite this ‘funflation’, however, people are still committing to the expense in desire of experiences and creating memorable moments.

Income Invest Inginsider

Leave a Reply

Your email address will not be published. Required fields are marked *