We’re all dreaming of a hot summer of fun. But who can still afford one?
With temperatures rising and Memorial Day weekend on the horizon, the good people of Illinois are stirring into vacation mode. The summer season is almost here and we all deserve some fun. The problem? Who can actually afford it? To wit: Those plane tickets to the beach and elsewhere rose a stunning 18.6% during April, the fastest single month rise on record. A round trip to a fun coastal city can easily cost a family of four $3,000 or more. Gas prices in the Chicago area are up 27 cents in just a week, the AAA has said, and it’s now not unusual in Chicago to part with $5.50 or more for a single gallon of regular fuel, a whopping increase from the $2.50 or so that was common a little more than a year ago.
And when it comes to a craving for some crab shack at the beach, the cost of eating out is rising so fast that some restaurants are using stickers to increase prices faster than their menus can be reprinted.
“Reminds me of way back when in Venezuela,” Tweeted Bloomberg reporter Nathan Crooks. At least Crooks could see the stickers at his Florida taco joint. Those increasingly digital menus just disappear the old prices in Orwellian fashion.
And there’s a new worrying wrinkle if the baby is in the back seat: the difficulty finding adequate supplies of formula, which is a problem most Americans associate with the former Soviet Union, not the Walmart down the street. Plenty of young families will be stockpiling where they can and not trusting their ability to take care of the needs of their gurgling bundle of fun at their summer vacation destination.
If all that’s not depressing enough, there is the double whammy of the decrease in many people’s available funds to actually pay for all of these increased costs. 401(k) balances, for those with the stomach to pay attention, have been sinking at a rate that makes many Americans start to rethink whether the savings they have for retirement are going to remain in place.
Anyone invested in stocks has seen a hefty chunk of their gains over the last two years evaporate. Anyone invested in cryptocurrencies has wished of late that they had made other choices. And, worse, none of these trends appear to be in abeyance.
Markets, which loathe uncertainty, clearly have no idea what the cap will be on the coming interest rate hikes and thus they’ve been in a panic about the scope of the potential downside. Without question, there are more severe APR stings ahead for anyone with credit card debt, adjustable-rate mortgages or young couples hoping to buy a new home.
All of this, of course, explains why Democratic Party midterm prospects are in the doldrums. Most people do not pay close attention to the various fronts in the culture wars that tend to consume journalists and elites on social media. But they do pay attention to the prices at the pump or what they can count on as savings for the golden years.
It’s clear that the Biden administration and its so-called transitory team badly miscalculated inflation dangers, even if they could not have anticipated the combination of events that have contributed to this stunning collection of problems, a far cry from what most of us thought the post-COVID recovery would look like.
“Trump and Biden overdid their COVID spending packages, and the Powell Fed indulged in loose fiscal policy for too long with extreme money creation — the result of ignoring the monetary signals and relying on a New Keynesian staff model,” wrote columnist Ambrose EvansPritchard in the Daily Telegraph of London this week. He’s right, of course.
Those mistakes are in the past. The fed’s agonizing interest rate increases are the only viable medicine. And they’re no fun at all to swallow. Especially at the start of a summer that was supposed to be all about socializing, traveling and reconnecting with family members you likely have not seen for years.
You want a silver living? About the only one we’ve got for the summer leisure seeker is the strength of the dollar. If you’re headed to London for the Queen’s platinum jubilee, the exchange rate Friday was 1.22 dollars to the British pound, making prices in that costly city close to 15% cheaper, in real terms, than was the case last year. At 1.04, the euro is at near parity with the dollar, a similar improvement, meaning that Paris is now less expensive for eating out than, say, Miami Beach.
Those changes are bad news for U.S. exporters, of course, but any country where the currency is not tied to the strong dollar is likely to offer relative bargains for vacationers. Assuming, of course, you can afford to fly there.
If not, a plethora of the pleasures of our patch of the verdant Midwest are less than a single tank of gas away. Many Chicagoans will restrict their wanderings to Wisconsin or Michigan, perhaps carting grills to the lake and sucking up the price of hamburger meat. Or it’s plenty possible to have fun within the city limits of Chicago where the beaches are free, the views are spectacular and the company, we’ve always found, remains second to none.
It’s a fine moment to teach the kids that you don’t have to spend a lot of money to have fun together. What else you gonna do?