Consumer spending has surprisingly held up in the past year — largely a result of increased prices — but also from strong consumption in certain categories. Here’s where consumers are cutting back and splurging.

📉 Goods spending is slowing

According to a Morning Consult survey, consumer spending fell a sharp 9.5% in March — echoed by year-over-year earnings reports from two companies this week:

• 📉 Box sales: Packaging Corp of America’s (NYSE:PKG) worse-than-expected results showed a 7.5% drop in revenue.
• 📉 Shipments: United Parcel Service (NYSE:UPS) said domestic package volume was down 5.4% in the first quarter.

Retail life hurts right now — unless you’re in high-end luxury, which continues to perform.

📈 Services spending is growing

Notably in travel — an area that continues to perform as shown from first-quarter earnings reports:

• American Express (NYSE:AXP) posted record spending volumes — with the travel and entertainment category rising 39%.
• Visa (NYSE:V) reported a 24% jump in cross-border spending — indicating a sharp increase in travel spending boosted by China’s reopening.

Ernst & Young expects the US economy to get worse before getting better. But signs of a bottom in the housing market — a major driver of the economy — are giving hope that we could avoid a recession.

Big event coming next week: The Fed meets to announce the next interest rate hike — and everyone will be watching closely to find out if it’ll be the last one. 🙏

ICYMI: Four charts showing the early signs of a housing market bottom.