Abbie Parr/AAP
- 'Doom spending' is the idea of spending money to cope with stress about the economy or foreign affairs.
- More than a quarter of Americans are "doom spending," according to a report from Intuit Credit Karma.
- Strong consumer spending has helped prop up the economy in the past several months.
Americans are stressed out about their finances, and some are coping by spending more money.
More than a quarter of Americans are "doom spending" in order to manage their worries about the macroeconomy and foreign affairs, according to a report by Intuit Credit Karma, which surveyed more than 1,000 adults in November.
Some of the top concerns among respondents included inflation — the Consumer Price Index increased 3.2% year over year in October — cost-of-living increases, unaffordable housing, and not having enough money for small luxuries, or even basic necessities.
"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, said in the report. The rise of mobile shopping has also made doom spending almost as easy as doomscrolling. Almost $5.3 billion in sales revenue this Black Friday came from mobile purchases.
The phenomenon is most prevalent among younger generations, with 35% of Gen Zers, and 43% of millennials admitting to doom spending. Younger generations are particularly concerned about how tough economic conditions may impact their future wages, job security, and ability to land a lucrative job, per the report.
The rise in doom spending also comes as more Americans dig into their pandemic-era savings.
Excess savings from the pandemic — which peaked at $2.1 trillion in August 2021 — fell to just $148 billion this September, which amounts to a loss of more than 90% in two years. Over the past six months, almost half of Americans said the amount of money they're saving has gone down, and more than half said they have less than $2,000 in savings or none at all, according to Credit Karma's report.
Meanwhile, credit card debt has reached a record high this year, nearing $1.1 trillion for the third quarter of 2023.
And while all of this consumer spending has helped prop up the economy over the past several months — despite fears of a looming recession — experts believe the spending spree might begin to mellow out next year.
JP Morgan's Jamie Dimon joined the chorus of experts sounding off about consumer spending when he said back in September that "we've been spending money like drunken sailors" and "to say the consumer is strong today, meaning you got to have a booming environment for years is a huge mistake."