Doom Spending By US Consumers Results From Financial Stress

Financial concerns are causing considerable stress for Americans, and a portion of them are trying to alleviate these worries through increased spending. Intuit Credit Karma’s report reveals that over a quarter of the U.S. population is partaking in “doom spending” as a response to their anxieties about the overall economy and international events. This report is based on a survey of over 1,000 adults conducted in November.

“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 well being.”

Courtney Alev, consumer financial advocate at Credit Karma, via Business Insider

The advent of mobile shopping has made doom spending as straightforward as doomscrolling, with mobile purchases accounting for nearly $5.3 billion of the total Black Friday sales revenue. Survey respondents voiced major concerns about the inflation rate, which has seen the Consumer Price Index rise by 3.2% from the previous year in October, escalating living costs, unaffordable housing, and insufficient funds for even essential needs or minor luxuries.

Younger generations are most affected by this trend, with 35% of Generation Z and 43% of millennials admitting to doom spending. The younger populace is especially worried about the potential impact of harsh economic conditions on their future earnings, job stability, and the ability to secure high-paying jobs, as highlighted in the report.

The increase in doom spending is also occurring as Americans are rapidly dipping into their savings accumulated during the pandemic. Simultaneously, credit card debt has skyrocketed to an all-time high this year, inching close to $1.1 trillion in the third quarter of 2023.

In August 2021, excess savings peaked at $2.1 trillion but dropped drastically to $148 billion in September, marking a loss of over 90% in just two years. According to the report by Credit Karma, almost half of Americans have seen a reduction in their savings in the last six months, and more than half report having less than $2,000 or no savings at all.

Despite the looming threat of a recession, the surge in consumer spending has supported economic stability in recent months. However, experts anticipate that this spending boost may start to taper off next year.

Jamie Dimon of JP Morgan echoed other experts’ concerns about consumer spending, cautioning in September that current spending patterns have been excessively high and that it’s erroneous to assume that a robust consumer sector today guarantees a flourishing economic environment for years to come.