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Americans are facing higher costs across the board in both the essential and discretionary categories. Despite the economic pressure on many families, however, vacation seems like a non-negotiable.
Airfares were up 26% in June from the previous year, according to the Bureau of Labor Statistics and gas remains above $4 a gallon, per AAA data. Still, Americans planned to spend an average of nearly $2,900 on travel this summer, according to an April PricewaterhouseCooper survey of over 2,000 adults. The majority —71% — said they expected to spend the same or more than last summer.
Several headlines have lamented “fun-flation,” and insinuated that having fun — either at home via streaming and gaming services or at entertainment venues from amusement parks to concerts — has gotten so expensive that Americans aren’t doing it anymore. But airlines report sustained demand this summer and hospitality companies like Airbnb have also seen persistent bookings.
To continue affording the vacations and other discretionary expenses, some Americans are adjusting their everyday spending. Middle-income households accelerated their year-over-year spending on airlines by 8%, jewelry by around 7% and on restaurants by roughly 3% in the second quarter while grocery spending growth was flat, according to Bank of America Institute data.
“I think this is like the summer of trade-offs, especially for lower and middle-income households,” says Joe Wadford, a Bank of America Institute economist.
Here’s what analysts say those tradeoffs look like and why Americans are willing to make them.
Shorter trips or savings in the grocery aisle
The measures Americans will take to preserve their vacation vary. Some, especially Gen Z and millennials, simply plan to take shorter trips, PwC’s survey found. Gen X travelers expect to plan fewer, but more valuable trips. Overall, 45% of respondents plan to save on travel by shortening their trips while 44% say they will eat out less and 42% will travel closer to home.
“The folks who need to pinch pennies a little more, we are seeing that group either borrow to continue to have some of these [travel] experiences … or they’re making trade-offs,” says Jonathan Kletzel, who leads PwC’s U.S. travel, transportation and logistics practice.
Americans typically have a fairly fixed household budget, and when prices rise in one category like gas, they have to find money to afford discretionary costs by cutting back somewhere else, he says — often in the grocery aisle.That could mean changing the food they’re buying from expensive beef to cheaper chicken, for example, or trading down to store brands, Kletzel says.
“[Consumers] are sort of reallocating and nudging their spend around,” says Will Auchincloss, Americas retail sector leader at management consulting firm EY-Parthenon. “You’ve got some rough basket of goods you generally buy on a frequent basis, and you are trying to make the budget work as things get more expensive…They’re trying to shop for things that are cheaper, whether it’s by shifting channels or going [to] private label.”
The majority (84%) of summer travelers will be putting their trips on credit cards, according to a NerdWallet survey taken in February. Many of those travelers may be doing so to reap the benefits of credit card points and miles. Others just plan to pay for travel now and come up with the money later. More than a third (35%) of respondents who put their 2025 summer travel on credit cards were still paying them off, NerdWallet found. And 23% of those planning to charge this summer’s travel expected not to pay it off right away.
The K-shaped economy goes on vacation
Naturally, not all Americans are vacationing the same way, in terms of both their itineraries and their methods for paying for them. Higher-income Americans typically aren’t the ones cutting back on groceries to afford their travels, for example.
As with the rest of the economy, summer travel has taken on a K shape with some consumers spending at high levels for luxury trips and others keeping their travel spend low. The phrase “K-shaped” took off to describe the economy’s recovery after the Covid-19 pandemic and continues to illustrate the divergence in financial wellbeing between America’s high and low earners.
Auchincloss says some of the headline numbers associated with American travel spending may be buoyed by the high-earners shelling out for expensive vacations rather than the wider population taking a lot of trips.
“It’s theoretically possible we see travel spend go up, but that could be driven on higher price per trip and fewer overall trips because of the K-shaped world,” he says.
Still, the middle 40% of earners account for nearly 30% of airline spending in the last year, according to Bank of America Institute data, meaning that a broad swath of Americans who may be feeling economic pressure continue to spend on travel.
Given the affordability crunch on airfare and fuel paired with broadly low consumer confidence, it may be surprising that there hasn’t been a major pullback in travel expenses. The universal love of a good vacation may not fully explain it.
‘Experiential achievement’
There could be a psychological explanation for why Americans still go on vacation when financial circumstances are less than ideal. It’s not just that getting away is fun and relaxing, but for travelers, those trips can contribute to what Ashley Whillans, the Volpert Family Associate Professor of Business Administration at Harvard Business School, calls their “experiential CVs.”
A CV, like a resume, traditionally lists its writer’s academic and career history, often with the goal of getting another job or educational opportunity. An experiential CV is more about social acceptance where things like travel and hobbies that contribute to your personal development can give your social connections a boost too.
While the summer season and muted feelings about their finances may be driving folks to get away, “we like to have this sense of experiential achievement,” says Whillans, who researches the links between time-use and wellbeing.
Since Americans in particular tend to prioritize achievement as a core value, that could be contributing to a shift in Americans’ perception of travel from a luxury to a necessity, she says. It’s giving them that sense of accomplishment that helps bolster overall life satisfaction and fulfillment.
Additionally on the economic side of things, consumers have also proved resilient in recent years despite periods of record-high inflation, widespread recession expectations and economic uncertainty driven by government tariff policies. For the most part, Americans have continued to spend through it all.
“It is not easy out there, and things have gotten materially more expensive, particularly in those key categories that [consumers] buy frequently, and they do continue to spend,” says Auchincloss.
Despite the turmoil, the U.S. economy is far from recession territory, typically characterized by two consecutive quarters of negative economic growth. U.S. gross domestic product has been growing positively since the second quarter of 2025, according to the Bureau of Economic Analysis.
For now, that means that Americans may not feel pressure to cancel their trips out of fear of an impending economic contraction and the side effects — such as widespread job loss — it could bring.
“There are some yellow caution lights out there, but we’re not crossing into the red side yet,” Auchincloss says.
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