Funflation is fueling hobbies as Americans spend more on fun at home to avoid going out

"Funflation" is driving Americans to spend more on hobbies at home instead of going out. A recent Bank of America Institute report found that spending on hobbies increased by 7.9% in August, more than double the 3.4% growth in transactions. This is a significant shift from last August when transaction growth outpaced spending by nearly a percentage point.

Older Millennials, who are likely to have children, are some of the biggest spenders on hobby-related items like arts and crafts, outdoor recreation, and hobby shops. Gen Z, however, showed little growth in hobby-related transactions, but increased their spending on video games by 20% year over year. This reversal in hobby spending follows a decline in the category through late 2024, possibly due to consumers splurging on hobbies during the pandemic and then returning to pricier alternatives like travel.

Inflation remains steady at 3.4% over the past 12 months, leading the Federal Reserve to raise interest rates by 0.25% to bring inflation back to its 2% target. With the rising cost of going out, such as airline fares up 23.4% and food away from home up 3.4%, people are turning to the "couch economy" for entertainment. Streaming subscriptions now sit on more cards than movie theater and concert spending, and the percentage of U.S. domestic spending made through apps has increased to 58% this year, up from 48% in 2019.