With people feeling more secure than they did in 2020, consumer spending on services is set for a strong comeback this year.
Key insights about US consumers from Deloitte’s State of the Consumer Tracker
- Americans appear increasingly ready to stay in hotels compared to 2020 (figure 1), although the Delta variant has dented a bit of confidence. This, along with elevated safety perceptions about restaurants and pubs (figure 2), will aid real personal consumption expenditure (PCE) on accommodation and food services. Concerns about air travel, however, have not improved as much—only 49% of respondents in Deloitte’s latest survey feel safe to take a flight.
- As people feel more confident to visit stores (figure 2), retail ecommerce will likely face headwinds. For example, growth in retail ecommerce sales (excluding food services), fell to 3.3% in Q2 2021 from 7.8% in Q1; sales had grown a massive 31.9% in Q2 2020 due to the initial impact of the pandemic.
- A rise in preference for in-person events (figure 3) augurs well for recreation services, like theatres and sporting events. The workplace, however, is an area of concern for many, particularly since the Delta variant appeared. Nearly half of respondents said that they work from home at least two days in a week.
- Overall, as health concerns ease, consumers seem increasingly eager to spend on food services, travel, and leisure activities—things they likely missed out in 2020. Hence, we forecast that PCE on durable goods—a hallmark of the pandemic—will give way to services spending (figure 4) over the next few years.