CHART OF THE DAY: What recession? A record number of US consumers plan to vacation in a foreign country in the next 6 months
- The share of US consumers who plan to visit a foreign country in the next six months is at a record high.
- Apollo said the strong demand in consumer services means inflation could be difficult to contain.
- "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."
Our Chart of the Day is from Apollo, which shows that the share of US consumers who are planning to go abroad for vacation in the next six months has surged to a record high.
About 24% plan to visit a foreign country, well above pre-pandemic levels of 10%-14%.
The data, which is sourced from the Conference Board's consumer confidence survey, calls into question warnings that an economic recession is imminent. It also highlights that the Federal Reserve's goal of taming inflation is not yet over.
"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," Apollo chief economist Torsten Sløk said earlier this week.
That suggests the Fed is likely to keep interest rates higher for longer even though markets are starting to warm up to the idea of interest rate cuts in 2024.
While the October CPI report showed continued cooling in the pace of inflation to an annual rate of 3.2%, that was mostly driven by price declines in the auto sector, a slowdown in rent increases, and a sharp drop in energy prices.
Meanwhile, alternate inflation gauges tell a slightly different story.
The year-over-year change in the "supercore" PCE price index, excluding housing, has hovered just below the 4% range in recent months, according to data from Apollo, which is about double the Fed's long-term inflation target of 2%.
"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," Sløk said.
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