- The percentage of U.S. consumers who plan to visit abroad in the next six months is at an all-time high.
- Apollo said strong demand for consumer services means inflation could be difficult to contain.
- “The bottom line is that interest rates will stay higher for longer as the Fed continues to try to rein in non-housing inflation.”
Our Chart of the Day comes from Apollo and shows that the percentage of U.S. consumers who plan to go abroad on vacation in the next six months has reached an all-time high.
About 24% plan to visit abroad, well above pre-pandemic levels of 10-14%.
Data from the Conference Board’s Consumer Confidence Survey cast doubt on warnings about the inevitability of an economic recession. He also emphasizes that the Federal Reserve’s goal of containing inflation is far from over.
“American households want to travel on planes, stay in hotels, eat at restaurants, go to sporting events, amusement parks and concerts, which is why non-residential inflation remains so high,” Apollo Chief Economist Torsten Sløk said earlier this week.
This suggests that the Fed is likely to keep interest rates higher for a longer period of time, even despite the markets are starting to warm up to the idea of interest rate cuts in 2024.
Although the October CPI report showed a further cooling of the inflation rate to an annual level of 3.2%, this was mainly due to price declines in the automotive sector, a slowdown in rent increases and a sharp decline in energy prices.
Meanwhile, alternative inflation measures tell a slightly different story.
According to Apollo data, the annual change in the “supercore” PCE price index, excluding housing, has hovered just below the 4% range in recent months, which is about twice the Fed’s long-term inflation target of 2%.
“The bottom line is that interest rates will stay higher for longer as the Fed continues to try to tame non-housing inflation,” Sløk said.
