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.
Because of the significant rise in the stock market and significant cash flows from fixed income, US households have more money 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 continued strong demand for consumer services is the reason why it is difficult for the Fed to get supercore inflation under control. The bottom line is that rates will stay higher for longer as strong gains in employment and wealth continue to provide a tailwind to consumer services.
Source: The Conference Board, Haver Analytics, Apollo Chief Economist
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