Landry’s Chairman and CEO Tilman Fertitta told CNBC on Tuesday he expects consumer spending to remain strong throughout the rest of 2021, even as the initial boost provided by Covid stimulus earlier this year fades.
In an interview on “Power Lunch,” the billionaire restaurateur and casino operator said tax refunds sent to Americans and payouts starting for the newly created advance child tax credits will offer tailwinds.
“You’re going to continue to see money pile into the economy, probably, the rest of the year,” said Fertitta, whose sprawling hospitality empire offers him strong insights into how Americans are spending their cash.
“Then I think what’s going to happen is we’re going to lose some of this consumer, but we’re going to start getting back the business consumer and the conferences, and the big party rooms in New York and LA and all your big cities,” Fertitta added, noting he still believes the U.S. economy is “truly headed” for another Roaring Twenties “for a while.”
As the U.S. economy recovers from pandemic-induced shutdowns and more Americans get vaccinated, consumers are bouncing back in a big way.
In mid-June, Bank of America CEO Brian Moynihan told CNBC that consumer spending was 20% higher at that point this year than it was compared with 2019. Moynihan noted the stimulus money was one factor in the spending figures, which are based on transaction volumes across its customers’ debit and credit cards, as well as the Zelle payment network.
Right now, Fertitta said the more expensive restaurants in the Houston-based Landry’s group are seeing pronounced strength.
“What’s funny about the consumer is they like the high-end. It’s the high-end steakhouses, the high-end seafood houses,” Fertitta said. “It’s not your [Rainforest Cafes] and your Bubba Gumps. it’s your Mastro’s and … your Morton’s.” All four of those restaurant brands are under the Landry’s umbrella.
Fertitta said rising oil prices are one thing to watch because they can impact how Americans spend their money. On Tuesday, West Texas Intermediate crude futures hit a level not seen since November 2014, trading just shy of $77 per barrel, before turning negative on the session.
The current national average for gas prices is $3.134 per gallon, as demand picks up after pandemic-era reductions, according to AAA. At this time last year, the national average was $2.180 per gallon.
“Then the consumer starts looking, ‘If I’m paying $5 for gasoline, maybe I can’t buy up in a restaurant or maybe I can’t quite make it to a casino,’ so it can have a huge impact on us,” Fertitta said. “But then flights start going up, maybe people start driving to closer locations. And so I’ve seen it when gas goes up that it helps us, and I’ve seen it where it hurts us.”
It’s too early to tell what will happen this time around, he said, “but you can’t have inflation and everything at one time.”