Consumer debt unlikely to derail summer vacations

Mar 17, 2023, 14:54 PM by Matt Mowell

Much ink has been spilled lamenting high consumer debt levels. But a deeper dive into the data reveals consumer debt service ratios (DSRs) are just now back to average levels recorded since the 1980s, according to the Federal Reserve, despite the recent rise in credit usage and interest rates.

Overall, consumers—especially affluent households—still have the firepower to finance travel spending, keeping RevPAR growth on a positive trajectory at nearly 6% this year. However, the consumer credit environment is changing. Fiscal stimulus is in the rear-view mirror, excess savings are quickly dwindling and consumers must contend with higher interest rates. This means that DSRs are likely to rise this year, but not enough to upset summer vacation plans.

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