The Conference Board’s consumer confidence survey asks households if they plan to travel to a foreign country, and the chart below shows that a record-high share of US consumers are planning to go on vacation to a foreign country within the next six months.
The continued strong demand for consumer services is the reason why it is difficult for the Fed to get supercore inflation under control. US households want to travel on airplanes, stay at hotels, eat at restaurants, go to sporting events, amusement parks, and concerts, and that is why inflation in the non-housing service sector continues to be so high.
The bottom line is that rates will stay higher for longer because the Fed is still trying to get non-housing service sector inflation under control.
Source: The Conference Board, Haver Analytics, Apollo Chief Economist
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