Consumers are willing to pay more for essential services than they are for products. On today’s Business Beat, Jeff Sloan explains why this is important.
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Good morning, Paul!
Feeling the effects of inflation high prices at the grocery store? Paying more for gas? We all are. Well, how about services? Well, the price index of services rose twice as much in March as prices for products. The big difference though? Consumers are willing to pay more for their essential services than they are for products.
Why are we focused on that today on the Business Beat? Well, certain services such as entertainment or events, for example, fall into a discretionary spending category. And that’s important because discretionary spending is a good bellwether indicative of consumer confidence. So what does the data tell us? Well, the fact that demand for services remains strong in spite of increased costs, and given the many services are discretionary, consumer confidence is remaining relatively strong in spite of the impact of inflation on basics like food and gas. and beyond consumer confidence. The fact that demand for services remains has been good for the job market for service-related jobs. In March, over 214,000 jobs were created in professional and business services, as well as in leisure and hospitality.
What industry sectors stands to benefit most from the strong demand for services? Well, it’s travel. Travel is indeed the industry that will most likely see most of those services dollars that people are clearly still eager to spend. In fact, 81% of consumers state they intend to take at least one leisure trip in 2022.
Now here’s the bottom line: Whether your business is in travel or any other service sector, this is a really good time to push hard. As consumers are showing no signs of slowing down their spending on their beloved services, even in spite of having to pay higher costs.
I’m Jeff Sloan, founder and CEO of startupnation.com, and that’s today’s Business Beat on the Great Voice of the Great Lakes, WJR.