Americans are doom spending, which is spending money despite economic and geopolitical concerns, per CNBC.
Despite widespread concerns about the current economic state, consumer spending has displayed notable resilience.
A recent report from Intuit Credit Karma reveals that 96% of Americans are worried about the economy. However, the report also highlights that over a quarter of individuals are engaging in "doom spending," where they continue to spend money despite economic and geopolitical uncertainties.
Even with challenges like inflation and high interest rates impacting budgets, the National Retail Federation notes that a record-breaking 200 million shoppers participated in the period between Black Friday and Cyber Monday. Holiday spending is anticipated to hit historic highs, reaching up to $966.6 billion, according to NRF projections.
Courtney Alev, Consumer Financial Advocate at Credit Karma, commented, "Much like doom scrolling, we’re seeing people mindlessly shop to soothe concerns about the economy and foreign affairs, which could take a toll on their financial wellbeing."
Reports suggest that Gen Z and millennials are particularly prone to this mindset, with a Prosperity Index study by Intuit revealing that 73% of Gen Z individuals prefer living in the moment rather than cutting expenses. High inflation poses a significant challenge for those just starting out, with 53% of Gen Zers citing the increased cost of living as a barrier to their financial success, according to a Bank of America survey.
Ted Rossman, Senior Industry Analyst at Bankrate, acknowledged the discouragement felt by younger adults but highlighted the advantage of time for Gen Z workers, noting that "every dollar you set aside will compound." However, Bankrate's findings indicate that Gen Z workers constitute the largest group of nonsavers.
Rossman recommended finding a balance, suggesting the automation of a portion of income toward savings while incorporating some enjoyment into the budget to avoid paying high credit card interest.
