Consumer Spending Shifts as Gas Prices, Inflation Squeeze Budgets

Discretionary spending on dining, entertainment hit as households prioritize essentials

Apr. 18, 2026 at 10:20pm

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A minimalist illustration composed of overlapping geometric shapes in primary colors, conceptually representing the segmentation of consumer spending between essential and discretionary categories.As households reallocate budgets toward necessities, the pullback in discretionary spending is straining local economies that rely on experience-based commerce.Today in Orlando

Despite overall consumer spending remaining resilient, a notable pullback in discretionary categories like dining, entertainment, and travel is straining local economies, according to recent data. Factors like high gas prices, persistent inflation, and geopolitical tensions are forcing households to prioritize essential spending over leisure activities, impacting businesses that rely on foot traffic and impulse purchases.

Why it matters

The shift in consumer behavior is disproportionately affecting small businesses and local economies that depend on discretionary spending, particularly in tourism-heavy cities. As households reallocate budgets toward necessities, the ripple effects could slow economic growth in certain sectors and regions.

The details

While overall consumer expenditure has not declined significantly, driven by continued spending on essentials and big-ticket items, discretionary spending categories such as dining out, movie theaters, and amusement venues have shown measurable weakness. Dave & Buster's Entertainment reported softer-than-expected same-store sales, citing reduced foot traffic as consumers cut back on leisure activities. Similarly, Callaway Golf observed a moderation in demand for discretionary golf-related purchases, though core participation in the sport remained stable.

  • Gasoline prices have hovered near $4.00 per gallon nationally for several weeks, according to the U.S. Energy Information Administration.
  • Inflation, while moderating from its 2023 peak, remains above the Federal Reserve's 2% target, particularly in services categories.

The players

Dave & Buster's Entertainment Inc.

A major operator of combined dining and arcade venues that reported softer-than-expected same-store sales, citing reduced foot traffic as consumers cut back on leisure activities.

Callaway Golf Co.

A company that observed a moderation in demand for discretionary golf-related purchases, though core participation in the sport remained stable.

Bank of America Corp.

A financial institution that confirmed the trend of declining expenditures at restaurants, entertainment venues, and travel-related services in its internal consumer spending tracker.

Mark Johnson

A senior economist at a regional Federal Reserve bank who explained that while consumers are not pulling back uniformly, the segmentation of spending reveals underlying stress.

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What they’re saying

“People are still buying what they need, but they're thinking twice about what they want. That's hitting businesses that depend on discretionary impulse and experience-based spending.”

— Mark Johnson, Senior Economist, Regional Federal Reserve Bank

What’s next

Businesses in the affected sectors are responding with targeted promotions, loyalty programs, and value-oriented offerings to attract cost-conscious consumers. Financial institutions are also adjusting their consumer credit models to reflect the shifting spending patterns, particularly in assessing risk exposure to sectors tied to leisure and hospitality.

The takeaway

The pullback in discretionary spending, driven by high gas prices and persistent inflation, is disproportionately impacting small businesses and local economies that rely heavily on foot traffic and experience-based consumption. As households prioritize essential purchases, the ripple effects could slow economic growth in certain sectors and regions, underscoring the need for businesses and policymakers to address the evolving consumer landscape.