Wenyao Hu, Ph.D., CFA
High interest rates persisted throughout 2023, with an increasing number of Americans now believing that inflation is the new normal. With the holiday season now upon us, many consumers are also cutting back on gift spending – with 42 percent of shoppers telling Bankrate.com that they expect to buy fewer items this year, and 41 percent planning to seek out more coupons, discounts, or sales.
As the New Year approaches, will Americans continue to simply survive, or will consumer spending tell a more optimistic story?
Wenyao Hu, Ph.D., CFA, assistant professor at New York Institute of Technology’s School of Management, shares his predictions.
“In response to inflation, the Federal Reserve has raised the federal funds rate since the beginning of this year, but forecasts, including those from Goldman Sachs, suggest a possible decrease in rates by the year 2024 if inflation subsides,” says Hu. “This anticipated shift aims to prevent economic slowdowns, echoing the strategic rate cuts of 2019 amidst stable unemployment and inflation rates.”
Hu notes that, as higher interest rates are expected to cease in 2024, investors should consider exploring alternative investment opportunities beyond quasi-safe assets.
“Diversifying into dynamic, growth-oriented strategies may become essential to adapt to these changing economic conditions and maintain portfolio resilience in the face of shifting monetary policies,” he says.
According to Hu, 2024 will also be an interesting year to watch Gen Z spending and saving trends.
“Gen Z is leading a ‘soft saving’ trend, prioritizing quality of life and present experiences over traditional savings,” he says. “This means they're more likely to spend money on things that bring immediate happiness and are open to investing in causes that reflect their values.”
For members of Gen Z, as well as others, there’s a good chance this means prioritizing spending on entertainment.
“The post-COVID era is witnessing a surge in the concert economy, exemplified by the success of Taylor Swift's ‘The Eras Tour.’ This trend demonstrates a strong consumer appetite for in-person entertainment experiences, significantly boosting local economies,” said Hu, adding that Swift’s tour has had a remarkable economic impact, with each show grossing around $13 million and generating substantial consumer spending.
“This phenomenon is not just limited to ticket sales but also extends to related spending on travel, accommodation, dining, and retail, which significantly benefits local businesses,” says Hu.
Savvy investors could also have potential opportunities to capitalize on the concert economy. Hu notes that individuals can profit from the “concert economy trend” by investing in businesses related to the entertainment and events industry, such as companies involved in event management, ticketing platforms, hospitality, and transportation services that benefit from increased consumer spending around major events. Additionally, investing in stocks or funds related to the entertainment sector can be a strategic way to leverage this growing trend.
Hu is available for interview/comment. Contact [email protected].
RSS