Companies see rising consumer spending despite headwinds
In the first quarter of this year, the U.S. economy was hit by high inflation, supplychain disruptions and the COVID-19 omicron variant. Despite those headwinds, consumer spending increased for many goods and services.
Consumers’ resilience was highlighted in the quarterly financial results released in the past few weeks by some of Connecticut’s largest companies. Encouraged by those numbers, executives at those firms expect to see rising demand during the remainder of the year.
“The consumer, on the back side of the pandemic, is looking to engage. They’re going to look to travel, socialize and get out of their homes,” Brian Wenzel, chief financial officer of Stamford-based Synchrony, the country’s largest provider of private-label and storebrand credit cards, said in an interview. “Consumers want to get back to life as normal.”
Synchrony customers’ purchase volume totaled about $40 billion in the first quarter, up 17 percent from the same period in 2021 — well ahead of inflation. At the same time, the No. 187 company on the 2021 Fortune list grew its average number of active customer accounts by 6 percent to about 70 million.
Buoyed by the widespread easing of COVID-19-related travel restrictions, Norwalkbased Booking Holdings, the No. 424 Fortune company, saw its customers’ gross bookings hit about $27 billion, rocketing 129 percent from a year ago. Gross bookings refer to the total dollar value, generally including taxes and fees, of all travel services booked by customers.
“There are still restrictions and inconveniences imposed on travelers today by some countries, though we believe that the industry is moving in the right direction and progressing back to normalcy,” Booking CEO and President Glenn Fogel said on a May 4 earnings call.
“While we are pleased with the trends we are seeing right now across our brands, as we look toward the rest of the year, we are cognizant of the potential for macro uncertainty and are aware that inflation or other macro
sion of increases, the Connecticut General Assembly has kept the state’s minimum wage roughly in line with inflation over the years. The $6.70 minimum wage employers were paying in December 2002 would be worth $14.50 at today’s currency values, according
to a SmartAsset inflation calculator.
New England has seen the sharpest increase this year of any region nationally on DOL’s Employment Cost Index, up 2 percent in the past three months to edge the increases seen in California and other states in the West.
Between January and March, the CPI was up 2.1 percent in New England, a slower rise than
in many other parts of the country.
In California, skyrocketing inflation has already triggered an escalator in the state’s minimum wage that is linked to the CPI, according to the State Department of Finance. California workers making the state $15 minimum will get an extra 50 cents an hour, amounting to a modest $20 bump in weekly pay for those working full time.
Some employers that rely on lower-wage workers have been able to keep costs in check by reducing staffing, however, according to Tom O’Hern, the CEO of Macerich, which owns the Danbury Fair mall among dozens of shopping centers nationally, “What we have heard from a number of retailers is they ended up with slightly less staffing than they were pre-COVID — and even though the hourly rate may be up, the overall labor cost is flat to down.”
O’Hern was speaking Monday on a conference call. “We’re actually hearing more about improving margins than shrinking margins,” he said.