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- US consumers are responding in diverging ways to an uncertain economic outlook.
- While some are "doom spending" — mindlessly spending money — others are looking for ways to save.
- The economy needs these "doom savers," even though they could cause headaches for some businesses.
There's a lot to be anxious about.
In response to uncertainty, some people turn to "doomscrolling," or mindlessly swiping through a bottomless social media feed. More than a quarter of Americans say they're turning to the financial equivalent — doom spending — to quell their concerns.
If the antidote to "doomscrolling" is putting down the phone, then the opposite of "doom spending" might well be putting down the credit card in favor of "doom saving." Many consumers are doing just that.
Data from retailers and from the US government indicate a cohort of increasingly cautious consumers is growing, even as many continue to spend "like drunken sailors," in the words of JPMorgan CEO Jamie Dimon.
And while the Intuit report that coined the "doom spending" neologism noted that a troubling 22% of Americans have no savings at all. Millennials and Gen Z survey respondents, in particular, report they are blowing cash (or promising to pay later) for stuff that makes them feel a little better, for now at least.
Still, roughly half of Americans have at least $2,000 in the bank.
That's admittedly not great, but several signs point to a more mindful approach to money taking hold in some households.
For starters, US economic data released Thursday show a slight increase in personal savings, which has been in decline in recent months. The rate is still very low, and it will take a few more months to see a real trend.
Meanwhile, retailers like Walmart and Target said in November that consumer spending was continuing to crack under the pressure of high interest rates, persistent inflation, and other factors like October's resumption of student loan repayments.
"This year, we've seen more and more consumers delaying their spending until the last moment," Target CEO Brian Cornell said. "Guests who previously bought sweatshirts or denim in August or September are deciding to wait until the weather turns cold before making a purchase."
Walmart CEO Doug McMillon even indicated that the recovery of supply and softening of consumer demand could lead to price reductions on the grocery aisle.
Both retailers, as well as several others, also noted that shoppers are trying to stretch their dollars further and are increasingly selective about the deals they're willing to spend on.
Spending on discounts and deals is, of course, not saving — it's still spending — but the mindset of "doom saving" is about responding to uncertainty by trying to conserve a finite resource.
Looking at Black Friday last week, shoppers responded strongly to deep discounts from retailers.
Most consumers are sick of high prices, according to a recent Morning Consult survey, but more than a third of respondents said they'd be okay with a recession if that's what it took to get inflation to come down.
Interestingly, even though these more cautious consumers could squeeze some companies' sales growth, the economy as a whole could seriously use a dose of their frugality.
In other words, "doom spending," like its older siblings "revenge spending" and "stimulus spending," is a key driver of the continuing inflation that has yet to be successfully reined in.
Spending less and saving more —doom saving, so to speak — might not be as entertaining as hedonistic consumption, but it should help curb the price increases that still pose a real risk to the economy.