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Remote work is the reason why Wall Street was wrong about a recession



Your boss may hate remote work, but it’s one of the reasons the U.S. economy is chugging along as strongly as it is.

From Beyoncé and Taylor Swift concerts to wedding travel, remote work has made it easier for some workers to take long weekends throughout the summer without worrying about rushing home to make it to the 9 a.m. all-hands meeting on Monday. That’s boosting the country’s GDP, which rose by 2.4% in the second quarter, according to the U.S. Department of Commerce, primarily driven by consumer spending on services like vacations, concert tickets, and restaurants. (Business investment and state and local government spending also helped.)

Economists have predicted that spending would slow for a while now, forecasting a recession sometime this year. But that hasn’t happened yet. At least part of that can be attributed to the fact that many workers are no longer “constrained” to the office on Mondays and Fridays, Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics, told Axios. That flexibility makes it easier to take trips and spend money.

“I absolutely think it’s helping us stave off that recession that many of us thought we’d be in by now,” LaSalvia tells Fortune. “Consumer spending is well above what it was a year ago. I do think it’s because of this willingness to get out there and do things, and a big part of that comes from the fact that the costs associated with traveling, going to concerts, spending a few days with friends have diminished.”

Not just monetarily—LaSalvia notes the calculation for doing things is different now for many workers who don’t have to use a vacation day to take a more convenient flight.

“If I’m not in the office Friday and Monday, and I could maybe be in my pajamas and not make the commute, that’s a huge costs savings to me,” he says. “I can go to that concert, party all night, make my way back on Sunday and work without taking the day off.”

Americans will spend to make up for lost time

With inflation as hot as it’s been and interest rates rising, some economists and investors have predicted a recession for more than a year. But so far, consumers have been resilient (it helps that personal income is also up).

Ted Rossman, senior analyst at Bankrate, previously told Fortune that many people are still hungry to make up for lost time to the COVID-19 pandemic. Though it’s been years since the strictest lockdown measures kept many people inside, there is still a backlog of delayed events like weddings and concerts that consumers are eager to attend. And though pandemic savings are depleting, some consumers still have an excess cushion of money to spend, according to the Federal Reserve. And, inflation has slowed.

“There’s been a permanent structural change in leisure demand because of the flexibility that hybrid work allows,” Scott Kirby, CEO of United Airlines, said last fall. “This is not pent-up demand. It’s the new normal.”

And the TSwift lift—the boon to the local economy in cities Swift performs her Eras Tour—is very real, says LaSalvia. Swift isn’t the only act in town, of course—Beyoncé, Ed Sheeran, and other major acts are also performing across the country, and people are happy to spend to see their favorite artists.

“We have to give credit where credit is due to some of those musicians,” he says.

Less office time means more hobby time

Spending less on commuting—and spending less time in the office—has also allowed consumers to put their time and money into other hobbies. In fact, a survey released last fall found that employees who go into the office spent an average of $863 per month in work-related expenses like commuting and lunches, compared to just $423 for full-time remote workers. And that’s without taking into account child care, giving remote workers even more to spend on other things.

The past three years have been a push and pull between workers and bosses when it comes to flexible work policies. Employers continuously say they want employees back in the office to foster collaboration (among other explanations); many workers contend that they’re more productive at home (the data there is mixed).

Though the policies are often in flux, at least for now hybrid schedules are winning out at many companies in sectors that don’t require in-person work. LaSalvia says if bosses start demanding workers be at their desks in office Monday mornings, the spending will dissipate.

“If [in-office days] stay Tuesday to Thursday, I think this story maintains. These one night trips become three night trips, and that maintains spending at hotels and restaurants and bars,” he says. “If that flexibility goes away, so does the travel.”

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