Forget Inflation, This CEO Claims The YOLO Economy Is In 'Funflation'

At a time when most countries around the globe are battling high levels of inflation, an American electronics retailer company's CEO opines that we are living in a 'funflation' economy.

What Is Funflation?

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As its name suggests, the term funflation is a combination of the words ¡°fun¡± and ¡°inflation,¡± to state the obvious¡ªbut it speaks to the curious spending habits that have been befuddling economists for years now. In short, higher demand for fun experiences drives higher prices for them. Simply put, it refers to the extra spending by people on activities or experiences such as concert tickets and eating out¡ªeven in the face of stubborn inflation.

How Is the YOLO Motto Driving People Towards Revenge Spending?

Forget inflation. American retailer Best Buy¡¯s CEO Corie Barry says we¡¯re living in a 'funflation' economy¡ªand it¡¯s hurting her business. ¡®Funflation,¡¯ Taylor Swift¡­those experiences are really where people are willing to pay,¡± Corie Barry said at Fortune¡¯s Most Powerful Women Summit in Dana Point, Calif., adding that this ¡°means the bigger ticket items in electronics are not right now where people are interested.¡±

After years of being locked down, American consumers have been eager to get out of the house and splurge on items and experiences like Taylor Swift concert tickets, Barbie in theatres, and airline tickets.

For instance, Taylor Swift fans spared no expense for the Eras tour, spending hundreds or thousands of dollars on tickets and costumes, as per a Fortune report.

This has also been called a ¡°YOLO economy,¡± in which consumers use the mantra ¡°You only live once¡± to justify their purchases. The term ¡°revenge spending¡± has come into use as well, with American airline Delta CEO Ed Bastian referring to the fun-seeking phenomenon as ¡°revenge travel¡± and saying it¡¯s a $300 billion market opportunity.

¡°People talk about revenge travel, or pent-up travel¡ªthis is beyond anything that people can classify as truly pent-up,¡± Bastian said on Fortune¡¯s Leadership Next podcast in June. ¡°We went through several years of people not being able to get back out and travel and experience and see loved ones, see their business colleagues, adventures¡ªall the reasons we travel. And people had a lot of time.¡±

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Also Read: Why Beyonce Is Being Blamed For High Inflation In Sweden

Why Are People Spending So Much For Fun?

As per the report, the American electronics retailer Best Buy¡¯s sales boomed during the pandemic as workers invested in electronics for their remote work setups and entertainment, Barry said. But now business has slowed down because consumers spend on increasingly expensive necessities, like food and fuel, or luxuries denied during lockdown, like concerts and vacations.

Overall, consumers have remained shockingly resilient this past year, despite the Federal Reserve raising interest rates in a bid to dodge a recession. People are splurging even as prices for housing, fuel, and groceries surge. Not to mention that student loan payments are back, further stretching millions of U.S. households.

Their continued spending has been buoyed by savings left over from the government¡¯s $4.6 trillion stimulus package and a job market that ¡°defies expectations¡± with low unemployment rates and hundreds of thousands of open jobs, according to Barry. But something has to give. For today¡¯s American consumer, that means ¡°nice to have¡± discretionary items.

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When Will Funflation Stop?

Well, ¡°funflation¡± shows no signs of stopping, and retailers will need to innovate to get customers¡¯ attention again. For Best Buy and its CEO, Barry, that means relying on the intensifying integration of technology with daily life. As per the report, ¡°the greatest thing about our industry is innovation,¡± Barry said. ¡°So yes, right now people are pulling back, but the future will only be more enabled by technology, and we are the ones that know how to commercialise that new tech better than anyone.¡±

Also Read: Zerodha's Billionaire Co-Founder Explains How 'Friendship Recession' Is Affecting Youngsters

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