- Instead of going to concerts or restaurants, wealthy people are spending more time alone in various forms of “solitary leisure.”
- Their spending has a huge effect on the economy: Deutsche Bank estimates that one-third of US GDP, or an estimated $US7 trillion a quarter, comes from the top 10% of American households.
- One expert told Business Insider the shift is likely temporary – but it could still have long-term economic effects.
- Before the pandemic, the rich had been spending less on tangible goods and pouring more of their money into services like wellness and education.
- When that kind of “inconspicuous consumption” evolves into solitary leisure, it leaves an economic gap that could lead to a stock-market bubble.
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The three months between the US economy locking down and reopening have opened a window into an entirely new and different world.
The New York Times said the pandemic has “shut down the experience economy.”
That much is evident in the ways Americans are choosing to spend their leisure time. There’s been a shift away from social leisure – recreational time spent in groups – and toward activities enjoyed alone.
A Bank of America note from late May said COVID-19 was pushing consumer spending away from traditional entertainment such as amusement parks, movie theatres, and tourist attractions and toward what it called solitary leisure, which includes activities such as golfing and marine activities.
The bank’s credit- and debit-card data showed traditional entertainment spending was down by more than 90% year over year in early May. Golf and marine spending were up 25% and 20%, respectively. Google Mobility data agreed: Restaurants, theme parks, museums, and the like were tracking 30% below pre-pandemic levels as of May 9, and visits to parks, beaches, and marinas were up 9%. These trends have all continued to accelerate through June, a more recent Bank of America note said.
The economy isn’t designed for solitary leisure
The problem is that the modern economy wasn’t set up for solitary leisure.
Consumer spending was America’s big economic driver of the early 21st century, with a lot of service jobs depending on the social leisure activities popular in big cities, especially the “experience economy” fuelled by high-net-worth people travelling, eating out, and enjoying culture.
Leisure spending has taken on various forms since modern capitalism was born, from the “conspicuous consumption” of the nouveau riche in the 19th century to the more recent “inconspicuous consumption” of high earners. But it’s never before entered a mass moment of solitary leisure like this.
The experience-based economy thrives on activities like sporting events, travel, and recreation with family, Daniel Yoder, the department chair of the Recreation, Park, and Tourism Administration at Western Illinois University, told Business Insider. As long as people have the discretionary money, Yoder said, the experience-based economy will continue to grow.
In pre-coronavirus days, the ultrarich were embracing a new kind of inconspicuous consumption that represented a critical part of the experience economy. They were investing in intangible concepts, such as health, wellness, and high-end education, instead of tangible signifiers of wealth, like Louis Vuitton handbags and sports cars.
The phrase “inconspicuous consumption” comes from Elizabeth Currid-Halkett’s “The Sum of Small Things: A Theory of an Aspirational Class.” This kind of discreet wealth became the new status symbol as the wealthy looked to nonmaterial services that would help them gain new prestige for having “social, environmental, and cultural awareness,” she said.
But the layoffs, furloughs, and salary cuts of the pandemic era mean that for some, discretionary spending has all but disappeared. About 47 million Americans have filed for unemployment over 14 weeks.
And just over half of American respondents in a TruePublic survey said they wouldn’t attend large events like Coachella or Comic-Con until a vaccine was available (38% said they wouldn’t until long afterward), while 45% said they wouldn’t attend a sporting event until there was a vaccine or long afterward.
The severity of the pandemic’s influence on the experience economy depends on how long the pandemic lasts, Yoder said. He thinks the uptick in solitary leisure likely won’t have a long-lasting effect and that social leisure will pick up where it left off if the pandemic is over in the short or even medium term, he said.
“I think if we can get control of this within a year or year and a half, the forces of the economy are just so incredibly powerful that I think we won’t see a lot of changes,” Yoder said. “When restrictions are lifted, as we’re seeing now, there is a lot of pent-up desire to engage in social events.”
When solitary leisure meets inconspicuous consumption, that leaves a gap in the economy
For all of its inequalities, the pre-coronavirus service economy wasn’t close to being a match for the solitary-leisure era.
Goldman Sachs said consumer spending accounted for 70% of the American economy, while Deutsche Bank estimates that almost half of consumer spending comes from the top 10% of American households.
That means spending from the top 10% makes up about one-third of US GDP. Spending on solitary leisure alone won’t fill a gap that big. So even though the rise in solitary leisure is temporary, it could create a long-term economic effect.
Former Yale history and global affairs professor Ted Fertik recently tweeted, “Working people can’t cut spending; the rich can and will.” And the savings of the rich will inevitably go somewhere, he added, meaning that if rich people stop consuming, a stock-market bubble becomes likely – and there’s evidence that one has already inflated. Bank of America said last week that the three months from April to June were on course to be the best for global stock performance since the first three months of 1975, and the best for the S&P 500 in half a century.
Yoder added that he worried about the social drawbacks of solitary leisure as the new normal, for however long it lasts.
“I think human beings do better when they’re involved with other people,” he said. “We do not do well as human beings when we’re isolated. And I think sitting in front of a screen is pretty isolated. So if solitary leisure really increases greatly, I just think that’s a weakening of the bonds that hold society together.”