American consumers are officially over the pandemic. What other conclusion is there to draw from the news that Peloton Interactive Inc. is temporarily halting production of its bikes and treadmills, sending its shares tumbling as much as 27%?
Now Americans are going to have even less time to ride those “connected” bikes and run on those treadmills that Peloton hoped would kick-start growth. That’s because consumers are busy making vacation plans, and you can’t take your Peloton on vacation. United Airlines Holdings Inc. Chief Executive Officer Scott Kirby told CNBC on Thursday that he expects the carrier to return to profit in the second quarter and benefit from a “very strong summer” for air travel demand. American Airlines Group Inc. also said Thursday that bookings are improving on the hope that omicron is waning. “People have gotten to the point they believe this is going to be behind us before too long, and they’re confident and making travel plans, certainly in the future,” CEO Doug Parker told CNBC.
It’s not just the airlines that are sounding confident. Global tourism is on its way to a “long-term, sustainable recovery” as more travelers and countries recognize the endemic nature of Covid-19, Ho Kwon Ping, the executive chairman of hotel operator Banyan Tree Holdings Ltd, said in a Bloomberg Television interview on Monday. “While the pickup in new bookings is slower because people want to be cautious, there’s a recognition that it is going to become endemic, and that recognition is changing people’s attitude,” Ho said. “That’s why we’re so optimistic.”
Indeed, the latest consumer sentiment survey from the Conference Board showed that the number of Americans planning to travel on vacation is back to pre-pandemic levels.
Peloton’s woes underscore the broad shift underway in consumer spending, from goods back to services, which is how it was before the pandemic hit in early 2020. Just look at that disappointing retail sales report for December that the Commerce Department released Friday. It showed a 1.9% drop, the biggest in 10 months and far exceeding the forecast for a 0.1% decline. But dig below the headline and you’ll find that drop was mostly due to fewer purchases of the same goods that had “wildly overshot a pre-Covid baseline, like furniture, online, and electronic/appliances,” Tom Porcelli, the chief U.S. economist for RBC Capital Markets, wrote in a research note.
So, in a way, Peloton’s struggles should be a sign that life may finally be getting back to normal. How much longer before those with a Peloton use the bike more as a place to hang dirty clothes waiting to go to the dry cleaner than for a workout?
More From Other Writers at Bloomberg Opinion:
• Peloton’s Stock Surge Makes Sense in Deal Land: Tara Lachapelle
• The Five Biggest PR Blunders of 2021, Zoom Edition: Kara Alaimo
• Airlines Will Need Big Data to Revive Post-Covid: David Fickling
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Robert Burgess is the executive editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.
More stories like this are available on bloomberg.com/opinion
©2022 Bloomberg L.P.