Lockdown defenses for China are better in U.S. services
Shenzhen, a manufacturing hub in China, is at the center of a new wave of lockdowns that will disrupt supply for companies like Apple (AAPL.O). Snafus like this are one of the reasons why inflation in the U.S. is at a four-decade high of nearly 8%.
Households will revert to their pre-pandemic spending patterns, focusing their non-essential expenditures on services like restaurants and travel as electronics and cars become more expensive, or even unavailable.
Despite being cooped up, Americans bought more stuff in the past two years. For example, spending on durable goods increased 14 percent from a year earlier in 2020, according to the Bureau of Economic Analysis. But services fell by five percent.
Consumers accumulate about $2.6 trillion of excess savings during the pandemic, Moody's Analytics estimates, with more of it going to wealthy households. Services account for approximately 70% of consumer expenditures, so this drop meant more money was squirreled away by certain households.
The Consumer Price Index, released by the Labor Department in February, showed that consumer prices rose 7.9% over the past year. Goods and services spending have increased in recent quarters, but rising costs are leading to rebalancing.
Meanwhile, services excluding those related to energy grew by a less impressive 4.4%. That will make eating out or booking holidays seem more affordable for people whose budgets aren't stretched as far.
.jpg)
0 Comments