Daily Brief: US Shoppers Are Still Spending Plenty, But They’ll Have To Answer To Inflation Sooner Or Later

Daily Brief: US Shoppers Are Still Spending Plenty, But They’ll Have To Answer To Inflation Sooner Or Later

about 2 years ago3 mins

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Data out on Wednesday showed that US retail sales rose by the most in 10 months in January, even as one big nuisance keeps pestering the country’s shoppers.

What does this mean?

Inflation or no inflation, retail sales in the country were 3.8% higher last month than the month before – well up on the 2% that economists were expecting, and a long way from December’s 2.5% drop. Americans seem to have stuck to their online shopping habits, with so-called “nonstore retailers” posting a 15% gain. But they seemed keen on furniture and cars too, whose sales were up around 7% and 6% respectively. And while it’s true that restaurant and bar sales fell almost 1%, that shouldn’t worry anyone too much: there are only so many cocktail nights you can have when record Covid cases cause a new batch of restrictions, after all…

Retail sales

Why should I care?

The bigger picture: This might not last long.

Shoppers might already be getting buyers’ remorse: data out last week showed US consumer sentiment – a measure of how the public feels about their finances and the wider economy – is now at its lowest in over a decade. That stands to reason: more and more companies are raising their prices to balance out their own higher costs, while the US government is bringing its support packages to an end – both of which will limit how far the average shopper’s money will go.

Consumer sentiment

Zooming out: Turn off your screens.

This online shopping boom has worked out well for Shopify: the ecommerce platform reported on Wednesday that it processed 32% more sales last quarter than the same time in 2020, helping boost total quarterly revenue by a better-than-expected 41%. That pushed its revenue for last year up 57%, but it’s not feeling so good about this one: it’s expecting shoppers to keep swapping screens for stores as the pandemic continues to fade.


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Airbnb Reported Better-Than-Expected Quarterly Results As Travelers Get Going Again

Airbnb image

Airbnb reported better-than-expected quarterly results earlier this week, as travelers try to make this whole downtime thing last as long as they possibly can.

What does this mean?

The world’s working from anywhere but home right now, and it’s doing wonders for Airbnb: the company logged 16% more 28 night-or-longer bookings last quarter than the same time in 2019, as nomadic workers extend their stays for weeks at a time. And they’re living in style, flocking to more expensive locations and forking out on average 20% more a day.

Airbnb bookings
Source: The Wall Street Journal, FactSet

That helped Airbnb make $55 million in profit last quarter – a welcome turnaround from its $3.9 billion loss the same time in 2020. And since the company reckons bookings will reach pre-pandemic levels again soon, it gave a much better-than-expected revenue outlook for this quarter – prompting investors to send its shares up 4%.

Airbnb stock
Source: Google Finance

Why should I care?

Zooming in: More hosts, please.

Still, all those travelers need somewhere to stay, and Airbnb’s been struggling to sign up new hosts even as pandemic restrictions relax. In fact, there were only 7% more active listings last quarter than the same time in 2020 – particularly measly given a 59% uptick in overall bookings over the same period. But that might change soon: Airbnb reckons high inflation – which is forcing some households to earn extra money any way they can – will turn even more homeowners into hosts.

The bigger picture: Travel’s back.

The travel bug is working in Expedia’s favor too: the online travel agent also posted strong quarterly results last week, as its Vrbo booking platform helped it more than double its revenue last quarter. Those results – along with Airbnb’s – suggest the travel industry is bouncing back after two years of disruptions. And so does this: a recent survey shows that around 70% of vacationers in countries like the US, UK, and Japan plan to spend more on travel this year than they have in the past five years.



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