Another fun year

Posted by: Paul Donovan

31 Jan 2025 2 min read

Weekly Updates

For many advanced economies, 2024 was a fairly benign year. Inflation moderated, and unemployment remained low. Consumer spending was key to economic growth and the bias to spending on fun continued.
In the US, consumers鈥� spending on having fun went from around 1.9 times the amount of spending on boring durable goods at the start of 2021, to 2.4 times by the end of 2024. (Economists understand 鈥渇un鈥� as a theoretical concept, and assume it is anything that can be posted about on Instagram鈥攍eisure travel, concerts, restaurant meals, sporting activities, and clothes.)
The bias to spending on having fun can also be seen in the emergence of a north-south divide in Europe. Spain鈥檚 economy has significantly outperformed that of Germany (and, indeed, the United States) over the past three years. Spain鈥檚 reputation as a fun place to visit is part of that story.
Fun cannot outperform indefinitely, but there is no visible slowdown in momentum yet. Changing working practices (encouraging more intensive socializing) and the role of social media in increasing the visibility of 鈥渆xperiences鈥� support the trend. As larger numbers of young people are priced out of housing markets, they may choose to prioritize fun over the duller delights of saving for a deposit and purchasing washing machines.