Funflation Is Reshaping How Americans Spend on Hobbies
Funflation is becoming a bigger part of the consumer spending story as Americans continue putting money toward hobbies even while the cost of leisure activities rises.
New Bank of America Institute data shows that spending on hobbies increased 7.9% year over year in August, more than twice the pace of transaction growth. The data points to a notable shift in how consumers are allocating money toward leisure, with Millennials playing a particularly important role.
The trend covers spending at arts and crafts stores, hobby shops, outdoor recreation businesses and retailers connected to activities such as hiking, camping, skiing and scuba diving.
The increase comes as travel has become more expensive, creating another possible explanation for why some consumers are turning toward hobbies for recreation.
Rather than abandoning discretionary spending altogether, consumers appear to be changing where they spend it.
That is the central idea behind funflation.
What Is Funflation?
Funflation describes the rising cost of leisure and entertainment activities while consumers continue spending on them.
The latest Bank of America data provides an interesting example. Hobby spending increased 7.9% in August, while transaction growth was substantially slower, suggesting that consumers were spending more money rather than simply making more purchases.
Bank of America describes this as a reemergence of funflation in hobbies.
The distinction is important.
If consumers were simply visiting hobby stores more often, rising spending could be explained by increased activity. Instead, the faster growth in spending compared with transactions suggests that the average amount being spent is also increasing.
That could reflect higher prices, more expensive products or consumers choosing premium versions of the activities they enjoy.
The trend also highlights how people may adjust their leisure budgets when other forms of entertainment become less affordable.
Funflation Is Changing the Hobby Economy
The hobby economy covers a surprisingly broad range of activities.
Arts and crafts are included, as are hobby shops and outdoor recreation. That means the spending data captures both relatively inexpensive pastimes and activities that can require significant investments in equipment.
For example, someone buying supplies for a craft project may spend considerably less than someone purchasing equipment for hiking, skiing or scuba diving.
Yet both forms of activity are part of the broader hobby-spending category.
Bank of America said hobby spending rose 7.9% year over year in August, while transaction growth increased 3.4%.
That gap is one of the clearest indicators of the current funflation trend.
It suggests consumers have not completely pulled back from discretionary purchases. Instead, they are continuing to make room for activities they consider valuable enough to keep funding.
Why Consumers May Be Returning to Hobbies
The current hobby boom follows several years of changing leisure habits.
During the pandemic, consumers had fewer opportunities to travel and participate in many traditional forms of entertainment. Hobbies became an important way for people to spend free time at home.
As restrictions eased, spending shifted toward travel and other experiences.
Bank of America analysts have suggested that consumers may now be rotating back toward hobbies as travel becomes more expensive and after-tax wage growth has slowed.
Higher travel costs can make a local hobby look comparatively attractive.
A weekend trip may involve transportation, lodging, meals and other expenses. A hobby can provide entertainment without requiring the same level of travel.
That does not mean hobbies are necessarily cheap.
Avid participants can spend substantial amounts on equipment, supplies and accessories. The difference is that consumers may have more control over how much they spend and how frequently they participate.
That flexibility can make hobbies appealing when household budgets are under pressure.
Older Millennials Are Driving Much of the Spending
One of the most notable findings is the role of older Millennials.
Bank of America data indicates that older Millennials have the largest share of their population spending money on hobbies. They are followed by Baby Boomers and Generation X.
Older Millennials are also notable because they have relatively limited leisure time.
Bank of America analysts have suggested that spending by this group may include purchases made for children as well as personal hobbies.
That distinction is important.
A parent purchasing arts-and-crafts supplies, sports equipment or outdoor recreation products may be spending money for an entire household rather than simply for themselves.
The result is a generation that can have relatively little free time while still accounting for a significant amount of hobby spending.
The three-month moving average for Millennial hobby spending was approximately $210, compared with around $200 for Baby Boomers and Gen X, about $150 for younger Millennials and less than $100 for Gen Z.
These figures show how spending levels vary considerably across generations.
Funflation Looks Different for Gen Z
Gen Z presents a different picture.
Bank of America data shows that Gen Z’s hobby transaction growth was close to zero in August, down sharply from a 16% year-over-year increase the previous year.
However, that does not mean younger consumers have stopped spending on leisure.
Instead, their spending appears to be shifting.
Outdoor recreation spending, which can involve higher costs, declined for Gen Z. Meanwhile, younger consumers have shown interest in arts, crafts, hobby shops and gaming.
This suggests affordability may be influencing the types of hobbies younger consumers choose.
A board game, craft project or gaming session can offer a social experience without requiring the same spending level as travel or expensive outdoor equipment.
That flexibility could be particularly relevant for younger consumers managing tighter budgets.
Gaming Remains Important to Younger Consumers
Gaming is another major part of the changing leisure economy.
Bank of America data indicates that more than one-quarter of Gen Z consumers have some type of video-game spending, a rate more than four times that of Baby Boomers. Younger Millennials followed with more than 23%, while older Millennials were around 20%.
Gen Z video-game spending increased about 20% year over year in August, following an increase of roughly 30% the previous year.
That makes gaming an important part of the broader consumer spending picture.
Gaming can also provide something beyond entertainment.
Bank of America cited survey data indicating that more than one-quarter of Gen Z consumers feel a sense of belonging to a streaming or gaming community. The share was substantially higher than among younger Millennials and Baby Boomers.
For younger consumers, therefore, spending on gaming can combine entertainment with social interaction.
Arts and Crafts Are Benefiting From the Shift
Arts and crafts are another area where the changing spending landscape can be seen.
These activities can provide consumers with a relatively flexible way to spend their leisure budgets.
Someone can purchase a small amount of material and participate at home, or spend substantially more on specialized equipment and supplies.
That flexibility may help explain why arts and crafts remain relevant across generations.
For younger consumers in particular, lower-cost hobbies can provide an alternative to more expensive leisure activities.
Bank of America said younger Millennials and Gen Z have lower average hobby spending but a higher share of their populations recording hobby outlays. Analysts suggested this may reflect a greater tendency toward less expensive activities such as arts, crafts and board games.
The pattern illustrates an important aspect of funflation: rising costs do not necessarily eliminate demand.
Consumers can respond by changing what they buy.
Outdoor Recreation Faces a Different Spending Environment
Outdoor recreation is generally more expensive than many at-home hobbies.
Hiking can require equipment, while skiing and scuba diving can involve substantial costs for gear, transportation and participation.
As a result, outdoor recreation may be more exposed to changes in household budgets.
The latest data suggests that Gen Z has been moving away from some of these more expensive activities while continuing to spend in other hobby categories.
For outdoor retailers and recreation businesses, that could create an important challenge.
Consumers may still want the experience but become more selective about how often they participate or what equipment they purchase.
Businesses could therefore see consumers move toward entry-level products, used equipment or less expensive activities as prices remain elevated.
Funflation Does Not Mean Consumers Are Ignoring Prices
It would be misleading to interpret the spending increase as evidence that consumers do not care about rising prices.
The data suggests something more complicated.
Consumers appear to be prioritizing some forms of discretionary spending while adjusting the categories they choose.
A household may reduce travel but continue spending on hobbies. A younger consumer may spend less on outdoor recreation but more on gaming. A parent may spend on arts and crafts because the activity can provide entertainment for multiple family members.
These are different responses to the same economic pressure.
In that sense, funflation is not simply about higher prices.
It is also about how consumers decide which experiences are worth paying for.
The Pandemic’s Influence Is Still Visible
The latest hobby-spending pattern also reflects the longer-term impact of pandemic-era consumer behavior.
During periods of social distancing, many people invested heavily in hobbies.
Some consumers purchased crafting supplies, gaming equipment, outdoor gear and other products to fill time when travel and entertainment options were limited.
Later, spending moved toward travel and other experiences.
Bank of America analysts have described the recent increase in hobby spending as part of another rotation in consumer behavior.
The shift demonstrates that leisure spending is not fixed.
Consumers can move between categories depending on prices, available time and personal preferences.
That makes hobby spending an interesting indicator of broader consumer behavior.
What Funflation Means for Businesses
The trend has implications beyond individual consumers.
Retailers selling hobby products may benefit when consumers prioritize leisure spending.
However, businesses also need to recognize that consumers remain price-conscious.
A customer who wants to maintain a hobby may not necessarily buy the most expensive product available.
That creates opportunities for retailers offering different price points.
For example, a store could serve both serious hobbyists looking for premium equipment and consumers seeking affordable entry-level products.
Digital communities may also become increasingly important.
Gaming, crafting and other hobbies often have strong online communities, giving businesses additional ways to connect with consumers beyond traditional advertising.
The spending data therefore offers clues not only about what consumers are buying but also about how companies can understand changing leisure preferences.
The Bigger Consumer Spending Picture
The resurgence of hobby spending comes at an important time for the U.S. consumer.
Households continue to make choices about where discretionary dollars should go.
Travel, dining, entertainment, hobbies and gaming all compete for the same basic pool of disposable income.
The current data suggests that consumers have not abandoned leisure spending.
Instead, they are reallocating it.
That distinction matters for economists and businesses attempting to understand consumer resilience.
Higher spending on hobbies could reflect higher prices, stronger demand or a combination of the two. The Bank of America data shows spending increasing faster than transactions, but that alone does not establish exactly how much of the increase comes from prices versus changes in what consumers purchase.
Final Takeaway
The rise of funflation highlights an important change in consumer behavior.
Hobby spending increased 7.9% year over year in August, according to Bank of America data, while transaction growth was only 3.4%.
Older Millennials are leading much of the spending, while Gen Z is shifting toward different forms of leisure, including gaming, arts and crafts and hobby-shop purchases.
At the same time, rising travel costs may be encouraging some consumers to redirect money toward hobbies that can be enjoyed closer to home.
The result is a consumer economy where people are still willing to spend on fun, but they are becoming more selective about what that fun looks like.
That may be the most important lesson from the latest data.
Funflation does not necessarily mean consumers are spending without limits. Instead, it shows that even when leisure becomes more expensive, many people continue to protect a place in their budgets for the activities they value most.
