World Cup Drives Tourism and Retail Spending
The World Cup — yes, including beer sales — helped to boost consumer spending and expand economic activity this summer, according to the Federal Reserve’s latest check-in on the local economy, though signs of stress are apparent among low- and moderate-income households.
In its Beige Book compilation of insights from business and banking contacts around New England, the Fed this week said economic activity in the region “continued to expand at a slight pace” since its June 3 update. Increases in tourism and retail spending, though, were partially offset by a drop in discretionary spending among households with modest means, which the report attributed largely to high necessities prices.
Consumer Spending Reflects Shifting Priorities
“Boston hotel contacts said World Cup bookings were initially below expectations but rose to meet them after room rates were reduced to seasonally typical levels. Bars in Greater Boston also saw a marked uptick in beer sales, which they attributed to the World Cup. The volume of Canadian travelers increased slightly from last summer, but remained well below historical levels, disproportionately affecting some towns in coastal Maine and northern Vermont,” the report said.
It added, “A grocery chain operator reported overall sales that were softer than anticipated but said higher beef prices had led to record sales of chicken and pork as customers traded down to those lower-priced items.”
Lower-Income Households Face Rising Financial Pressure
The Fed’s contacts that serve low- and moderate-income households reported “increased demand for assistance along several dimensions, as families struggled with persistently high prices of food, housing, and transportation.” Reliance on food pantries is up, transportation assistance is in greater demand, and nonprofit organizations are getting more requests for help with housing payments and healthcare supplies. Lower-income consumers reportedly added credit card debt to pay for essential goods, the report said.
Economic Outlook Improves Slightly
Across various sectors of the economy, this week’s Beige Book suggested there is little expectation of dramatic change in either direction. The report said the outlook for the future “improved marginally, and perceived uncertainty decreased.”
The real estate and construction industry could be an exception. The Fed said that its contacts there “expected multifamily sales and construction in Massachusetts to get a boost following the disqualification of a proposed rent control measure.”
