Americans splurged on movies at the cinema this year, with spending on outings such as going to see films and concerts shooting up by close to a third in the third quarter of 2023, recent data from the Mastercard Economics Institute showed.
The spending behavior illustrated what Mastercard analysts said was an example of how consumers were willing to spend their money over the summer of 2023. Americans spent on their "wants" and contributed to a 31 percent increase of outlays on such experiences.
"Taylor Swift, Beyoncé and blockbuster releases made a splash," Mastercard said in its analysis.
This year's summer release of high-profile movies such as the film adaptation of Barbie and the story of the "father of the atomic bomb" in Oppenheimer attracted scores of film lovers to the cinema.
Americans' willingness to dip into their pockets for such movies and other similar entertaining experiences fueled billions of dollars of spending through the third quarter of the year that powered the U.S. economy to grow by nearly 5 percent in that span, despite an environment of high inflation and elevated interest rates.
However, Mastercard analysts anticipated a decline in more impulsive spending next year.
"A key theme for 2024 is the 'need' and the 'want.' Consumers will spend on the 'need' and the 'want,' but not on the 'impulse,'" they said.
Mastercard anticipates that Americans will keep spending on experiences and self-care, but at a much slower clip next year.
Analysts from the financial services firm anticipate economic growth will slow to 1.7 percent in 2024 from the estimate of 2.4 percent for this year.
Part of the slowdown is due to the economy absorbing the full impact of Federal Reserve interest rate hikes that were instituted at an aggressive pace not seen since the 1980s to battle record high inflation.
Policymakers held rates at their current 20-year high of 5.25 percent to 5.5 percent for the third time in a row at their meeting earlier this month.
High rates have pushed up borrowing costs and have made the buying of things such as homes and cars much more expensive and slowed business investment.
While companies have not embarked on mass layoffs, recent employment data shows that companies have paused hiring and Americans who have lost their jobs are having a harder time finding employment.
Going into 2024, Mastercard experts believe that consumers will be a little more cautious in their spending, but will be positive nonetheless as the economy will emerge from an environment of high interest rates and inflation moderating with not too much damage to the jobs market.
"Job creation is likely to slow, but remain healthy, while inflationary pressures ease," they wrote.
Federal Reserve policymakers may be moved to start cutting rates in the late spring of 2024, they added.
Mastercard experts believes the consumer will remain in good financial shape.
"A strong labor market and healthy household balance sheets, on aggregate, should underpin spending," they said.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
