Doom spending and inflation

[RobertU]

While nearly 96% of Americans are concerned about the economy, more than a quarter are “doom spending,” or spending money despite economic and geopolitical concerns.

Gen Z and millennials are particularly susceptible to this mindset . . . we’re seeing people mindlessly shop to soothe concerns about the economy and foreign affairs, which could take a toll on their financial wellbeing,” said Courtney Alev, Credit Karma’s consumer financial advocate.

Prices are less likely to go down if young consumers are willing to pay for immediate gratification, regardless of the price. Most likely, those consumers will simply take the easier financial path of saving money by not having children.

Of course, no politician is going to hold any consumer even partially responsible for the high cost of living.

https://www.cnbc.com/2023/11/29/americans-are-doom-spending-heres-why-thats-a-problem.html

 

[VySky]

Americans continue to rack up credit card debt, hitting a record $1.14 trillion​

Americans continue to rack up credit card debt, hitting a record $1.14 trillion

Consumers tacked on an additional $27 billion in credit card spending in the second quarter, the Federal Reserve Bank of New York said.

www.cbsnews.com

 

[Peter]

I don't understand this at all.
People think things are bad so they go out and rack up crippling debt?

Erm, that's completely stupid.

 

[Loulit01]

I don't understand this at all.
People think things are bad so they go out and rack up crippling debt?

Erm, that's completely stupid.

The high tally comes amid concerns of an economic downturn triggered by modestly rising unemployment, and as soaring costs in food, housing and auto rates continue to drain household budgets. Americans have increasingly been relying on credit cards to make ends meet, with 6 in 10 adults, or 60%, using credit cards to buy groceries in 2023, according to a May report by the Urban Institute.

 

[Peter]

The high tally comes amid concerns of an economic downturn triggered by modestly rising unemployment, and as soaring costs in food, housing and auto rates continue to drain household budgets. Americans have increasingly been relying on credit cards to make ends meet, with 6 in 10 adults, or 60%, using credit cards to buy groceries in 2023, according to a May report by the Urban Institute.

Is buying food the considered doom spending?

 

[Loulit01]

Is buying food the considered doom spending?

Regardless of what it's called, it's a reason for the rise in credit card debt.

 

[RF667799]

Regardless of what it's called, it's a reason for the rise in credit card debt.

I think the "doom spending" idea has some merit also when considering other expenditures. Both tribes have spent the last couple years trumpeting that if the other tribe wins, life as we know it is over. Maybe the continuous drumbeat has had some effect.

 

[dseag2]

I see it all the time at one our upscale malls. Young people that look like they can't afford their next meal are lined up outside stores like Gucci and Louis Vuitton because some "influencer" recommended the brand. Student debt may soon take a back seat to credit card debt as Millennials and GenXers face reality.

 

[dmpi]

There was a time when debt was considered bad, now it's considered a necessity. It's a self-fulfilling prophecy. If enough people are willing to go into massive debt to get a home then home prices will rise accordingly, and then it's impossible for anyone else to afford a home without going into massive debt themselves.

 

[dseag2]

There was a time when debt was considered bad, now it's considered a necessity. It's a self-fulfilling prophecy. If enough people are willing to go into massive debt to get a home then home prices will rise accordingly, and then it's impossible for anyone else to afford a home without going into massive debt themselves.

Actually, home prices have not risen because people have been willing to go into massive debt to buy them.

They've risen due to a shortage of real estate. Increased costs of building materials due to Covid that have not reached pre-pandemic levels, builders unwilling to build starter homes because there aren't enough profits in them and corporations taking over housing developments and renting the houses rather than allowing them to be purchased have contributed to a housing shortage and higher prices.

 

[dmpi]

Home prices have not risen because people have been willing to go into massive debt to buy them.

They've risen due to a shortage of real estate. Increased costs of building materials due to Covid that have not reached pre-pandemic levels, builders unwilling to build starter homes because there aren't enough profits in them and corporations taking over housing developments and renting the houses rather than allowing them to be purchased have contributed to a housing shortage and higher prices.

There's no nationwide shortage of real estate. What we do have is shortages in specific areas such as cities with high paying technology and finance jobs. People are willing to go into massive debt because they feel that they can always get the dollars they put in back out when they sell. Also the idea that corporations are buying up all the housing is overblown. Do the math, take the price of a home, get a mortgage and see if you can rent it for that amount. You have an almost zero chance for a positive cash flow. Let alone you have to fix and maintain your home and find a renter when you have vacancy. I would argue that these corporations are actually lowering the price of homes rather than raise them because they entice people to rent rather than own.

 

[dseag2]

There's no nationwide shortage of real estate. What we do have is shortages in specific areas such as cities with high paying technology and finance jobs. People are willing to go into massive debt because they feel that they can always get the dollars they put in back out when they sell. Also the idea that corporations are buying up all the housing is overblown. Do the math, take the price of a home, get a mortgage and see if you can rent it for that amount. You have an almost zero chance for a positive cash flow. Let alone you have to fix and maintain your home and find a renter when you have vacancy. I would argue that these corporations are actually lowering the price of homes rather than raise them because they entice people to rent rather than own.

This is from Harvard Business Review. It may very well be something that neither of us thought of.

The Market Alone Can’t Fix the U.S. Housing Crisis

Unaffordable housing is a drag on regional and national economies. In areas where housing costs are high, employers end up effectively transferring significant sums to landlords as the cost of attracting talent. But what will it take to fix this problem? Will market-based solutions suffice? If...

hbr.org

 

[Ahlevah]

Is buying food the considered doom spending?

You can buy a lot of Top Ramen and Skippy for $1.14 trillion.