Some call it "revenge shopping." After more than a year of decreased pandemic spending on travel, clothing, and dining out, shoppers in California are ready to spend their money. And so far this holiday season, they are definitely spending their hard-earned money. And a lot of it.
The Legislative Analyst's Office shows a significant drop in consumer spending in California in 2020, an almost 20% dip from the months before Covid-19 hit the state. Now, California residents are not only back to their old spending habits, but they're spending even more in 2021 than in 2019. Rising spending can be attributed to increased numbers of vaccinated residents and resumed events around the state. California legislature's nonpartisan fiscal and policy advisor says, "Cumulative twelve-month growth in sales from September 2020 to September 2021 was 14 percent."
In fact, on average, Californians are spending $765 more per month on expenses like travel, dining out, and other in-person experiences compared to last year, according to MassMutual's Consumer Spending & Saving Quarterly Index. And, younger consumers are spending even more. Millennials and Gen Z'ers are reporting spending an average of $1,061 more than they did last year after apparently having been influenced by social media to go out and create memorable experiences.
MassMutual's Consumer Spending & Saving Quarterly Index shows California residents are creating more experiences outside their homes, but they are definitely more costly. Spending on dining out has risen 36% and spending on travel for entertainment purposes has risen 35%.
However, while consumers in California may be spending more dollars in 2021, they may not be getting as much bang for their buck. According to the State of California Department of Finance, the year-to-date weighted average of the consumer price index for the state of California in 2021 has risen 3.5%. That means many of the items Californians wanted to buy before the pandemic are significantly more expensive now.
Young people in California, after over a year of staying at home, are ready to get out into the world, expensive or not. Los Angeles resident Penny Frankel says, "I did my part and stayed home. As a single woman, Covid was hard. I'm ready to get out there again and go to dinners, see shows, and live my life."
When asked if she was concerned about spending more money than last year, Frankel said, "No. I saved a lot of money last year. Now, it's time to live it up."