The holiday shopping season is upon us, and despite the uncertainty in the economy, consumer spending remains strong. A report Intuit Credit Karma found that even though 96% of Americans are worried about the economy, more than a quarter are still spending, in a phenomenon known as “doom spending.”
The National Retail Federation reported that a record 200 million shoppers turned out over the Black Friday and Cyber Monday weekend. Holiday spending is expected to reach a record total of up to $966.6 billion this season, despite inflation and high interest rates putting pressure on budgets.
The report Credit Karma suggests that people are turning to shopping as a way to cope with concerns about the economy and global affairs, which could have a negative impact on their financial well-being. In fact, credit card debt has exceeded $1 trillion, and younger generations such as Gen Z and millennials are especially susceptible to this mindset.
According to a study Intuit, 73% of Gen Zers said they would rather live in the moment than cut expenses, and 53% see the high cost of living as a barrier to their financial success. This mindset is particularly challenging in the face of high inflation, which is making it hard for those just starting out in their careers.
In light of these challenges, experts suggest that younger adults should focus on saving. Ted Rossman, a senior industry analyst at Bankrate, advised automating a portion of income towards savings and building some fun into the budget to strike a balance. Despite the economic uncertainty, time is on the side of younger adults, and every dollar put aside for savings will compound.