Americans could be on a tight budget this summer
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Americans tend to shell out in the summer as they venture outdoors, book trips and step away from their desks. This year, warm weather might not be enough to get consumers to open up their wallets.
Consumers plan to spend less on away-from-home entertainment and vacations this summer, according to the 2024 KPMG Consumer Pulse Survey released Tuesday. That’s a contrast to last year when Americans shelled out on the “Barbenheimer” phenomenon, Taylor Swift and Beyoncé concert tickets and getaways.
Americans expect to reduce their monthly spending on dining out by 9% on average, by 8% for entertainment and media and by 7% on travel and vacations.
It’s not just discretionary spending that could take a hit. Just 21% of consumers plan to spend more on personal care products, a drop from 32% last year, according to the survey.
“Consumers are tightening their belts another notch as they hunt for discounts, and even some essentials are being impacted,” said Duleep Rodrigo, KPMG’s US consumer and retail sector leader, in a release.
While some companies have simply raised their prices to account for higher inflation, others have reduced the size of products like cleaning products, coffee and candies instead so that the price tag remains the same, though they are more expensive by unit.
Both tactics have drawn criticism from consumers. And there are signs that shoppers are becoming fatigued. Sales at US retailers rose just 0.1% in May from the month before, according to a report from the Commerce Department released Tuesday. That was above April’s downwardly revised 0.2% but short of FactSet consensus estimates of a 0.3% gain.
Slowing consumer spending should help cool the economy and help the Federal Reserve cut interest rates sooner rather than later, as long as inflation also edges closer to the central bank’s 2% goal. But a sharp, unexpected decline in spending, which accounts for the vast majority of economic output, would likely mean that the broader economy is in recession territory.
Customers are also searching for more than just the cheapest prices — they want quality, long-lasting products, even if it means they have to pay a little bit more.
Retailers that offer Americans more bang for their buck including Ross Stores, TJ Maxx and HomeGoods-parent TJX, Dollar General and Walmart have benefitted. But companies like Abercrombie & Fitch and Williams-Sonoma, which have loftier price tags than discount stores but are known for carrying high-quality products, are also seeing strong sales.
Americans are also feeling worse about the economy as they struggle with elevated inflation and high borrowing rates. The University of Michigan’s reading of consumer sentiment for early June showed that Americans’ attitudes about the economy was around the same levels as May, which saw a roughly 10% decline after three straight months of little change.
Relief could come later this year for consumers. Cool May inflation data has led investors to raise their bets that the Federal Reserve will cut rates this year. The Fed at its June policy meeting penciled in one cut this year and four in 2025.
Millionaires are fleeing Britain in their thousands
A record number of millionaires could leave the United Kingdom this year as political turmoil and the potential for higher taxes under a future Labour government reduce the appeal of what was once among the top destinations for the rich, reports my colleague Mark Thompson.
As many as 9,500 people with at least $1 million in liquid, investable assets, will leave the country, more than double the number that left in 2023, according to provisional estimates contained in a report Tuesday by migration advisers Henley & Partners.
“These figures reflect a steady accumulation of factors detracting from the UK’s appeal to high-net-worth individuals,” Hannah White, CEO of the Institute for Government, wrote in the report. “The hangover from Brexit continues to be felt, with the City of London no longer seen as the financial center of the world.”
The report is based on data on 150,000 high-net-worth individuals (HNWIs) tracked by investment firm New World Wealth. The firm only counts people who stay in their new country more than half of the year, and focuses primarily on company founders, chairs, CEOs, presidents, directors and managing partners.
The continuing exodus from the UK — 16,500 millionaires left between 2017 and 2023 — is part of a global mass migration of the rich that appears to be accelerating. The Henley Private Wealth Migration report found that 128,000 millionaires are set to relocate this year, beating last year’s record by 8,000.
Nvidia surpasses Microsoft to become the largest public company in the world
Nvidia, Wall Street’s artificial intelligence poster child, is now the most valuable company in the world, taking the crown from Microsoft.
Nvidia’s market capitalization closed at roughly $3.34 trillion on Tuesday, edging past Microsoft’s $3.32 trillion value. Apple is the third most valuable company in the US with a $3.27 trillion market cap.
Nvidia shares closed 3.5% higher on Tuesday. Microsoft shares fell 0.5% and Apple shares lost 1.1%. Nvidia earlier this month joined the tech giants in becoming the only US companies to cross a $3 trillion market cap.
The chipmaker’s stock has been on a tear for the last year and a half. Nvidia’s chips are unmatched in producing processors that power artificial intelligence systems, including for generative AI, the technology backing OpenAI’s ChatGPT that can create text, images and other media.
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