- U.S. consumers have mixed reactions to the uncertain economic outlook.
- Some people are “catastrophic spenders,” spending money without thinking, while others are looking for ways to save money.
- While it may cause headaches for some businesses, the economy needs these “crisis savers.”
There are many things to worry about.
In response to uncertainty, some people turn to “doomscrolling,” mindlessly swiping through bottomless social media feeds. If the antidote to “catastrophic scrolling” is to stop using your cell phone, the opposite of “catastrophic spending” might be to stop using credit cards in favor of “catastrophic savings.” Many consumers are doing just that. Even as many people continue to spend, in the words of JPMorgan CEO Jamie Dimon, “like drunken sailors,” data from retailers and the U.S. government shows that It points to a growing group of consumers who are becoming increasingly cautious. And the intuition report The researcher, who coined the term “catastrophic spending,” pointed to the problem that 22% of Americans have no savings at all. Millennial and Gen Z survey respondents in particular report shelling out cash (or promising to pay later) for things that make them feel a little better, at least for now. Still, about half of Americans have at least $2,000 in the bank. While this is certainly not great, some signs indicate that a more cautious approach to money is taking hold in some households. First, the US economy data Statistics released on Thursday showed a slight increase in personal savings, which had been declining in recent months. This rate remains very low, and it will take several more months to see any real trends. Meanwhile, retailers including Walmart and Target said in November that consumer spending continued to crack under pressure from factors such as high interest rates, persistent inflation and the restart of student loan payments in October. “This year, more consumers are putting off spending until the last minute,” Target CEO Brian Cornell said. “Guests who previously purchased sweatshirts and denim in August or September are holding off on purchasing until it gets colder.” Walmart CEO Doug McMillon even suggested that a recovery in supply and softening consumer demand could lead to lower prices at grocery stores. Both retailers and several others noted that shoppers are looking to make more money and are becoming increasingly selective about the deals they are willing to spend. Of course, spending money on discounts and sales is still spending, not saving, but the idea of ”catastrophic saving” deals with uncertainty by trying to conserve finite resources. It is to do. Looking at last week’s Black Friday, shoppers responded strongly to deep discounts from retailers. Most consumers are fed up with high prices, according to a recent Morning Consult investigationHowever, more than a third of respondents said they were fine with a recession if it was necessary to reduce inflation. Interestingly, while these more cautious consumers may weigh on sales growth for some companies, the economy as a whole could seriously capitalize on consumer frugality. In other words, “catastrophic spending,” along with its brethren “revenge spending” and “stimulus spending,” is a major contributor to continued unchecked inflation. Cutting spending and saving more – catastrophic frugality – may not be as fun as hedonic spending, but it should still help curb price increases that pose real risks to the economy. Loading… Watch now: Popular videos from Insider Inc.