Fewer Americans cutting back on spending and saving

The U.S. economy is facing stiff headwinds, but consumer spending remains remarkably resilient. According to a recent report by Intuit Credit Karma, 96% of Americans are concerned about the current state of the economy.

Doom Spending

Despite these concerns, more than a quarter of consumers are going on “doom spending” sprees, a term used in the report, to describe people who are spending money despite economic and geopolitical concerns.

Record-Breaking Shopping Turnout

This trend is evident in the record-breaking 200 million shoppers who turned out between Black Friday and Cyber Monday. The National Retail Federation projects that holiday spending will reach up to $966.6 billion this year.

Mindless Shopping and Financial Wellbeing

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.”

Gen Z and Millennials

Reports show that Gen Z and millennials are particularly susceptible to this mindset. 73% of Gen Zers say they would rather live in the moment instead of cutting expenses, as reported in a Prosperity Index study by Intuit. At the same time, 53% of Gen Zers consider the high cost of living a barrier to their financial success.

Credit Card Debt and Financial Success

Even as credit card debt reaches over $1 trillion, Gen Zers and Millennials have shifted their priorities. Instead of saving, younger adults tend to prioritize their current desires and expenses over long-term financial goals.

Time Advantage

Ted Rossman, senior industry analyst at Bankrate, advised, “Every dollar you set aside will compound.” While younger adults may feel discouraged, they do have the advantage of time, and Rossman urges them to strike a balance between saving and spending.

Building a Healthy Financial Future

Rossman also strongly suggests automating a portion of your income towards savings and incorporating a balanced approach to spending. “At least then you are not paying 20% credit card interest,” he said.

Conclusion

With Americans indulging in retail therapy in the face of economic worries, experts are emphasizing the importance of creating a balanced savings plan and mindset rather than indulging mindlessly in spending. While current trends show an increase in spending, it is crucial to weigh spending and saving priorities to ensure a healthy financial future.