Understanding doom spending: Why people overspend amidst economic uncertainty
Amid economic unease in the US and geopolitical concerns, an Intuit Credit Karma report reveals a new trend: "doom spending." Doom spending is a pattern of increased consumer spending in anticipation of a potential negative event. This behavior is driven by a sense of impending doom, whether it is a result of economic uncertainty, geopolitical tensions, natural disasters, or other crises.
Why does this story matter?
Despite inflation and soaring interest rates impacting budgets, a staggering 200 million shoppers surged during the Black Friday to Cyber Monday period, per the National Retail Federation. The NRF states that the anticipated holiday spending is slated to break records, estimated at $966.6 billion. CNBC notes Gen Z and millennials, despite credit card debt surpassing $1 trillion, remain particularly prone to this spending trend.
Why do people go on such a spending spree?
People engage in doom spending as a response to feelings of anxiety or a lack of confidence in the future. The rationale behind it is often to prepare for the potential impact of an expected crisis by stocking up on goods. According to a study by Intuit, instead of cutting expenses, 73% of Gen Zers said they would rather live in the moment.
Psychologist weighs in on this peculiar purchase habit
"People sometimes spend money excessively to cope with uncertain and difficult times. In times of hardship, individuals are often tempted to buy things in an attempt to find temporary relief. This behavior arises from the natural human need for stability and comfort," explains clinical psychologist Fatima Alam. By turning ordinary transactions into something more meaningful, people can momentarily escape from the overwhelming daily uncertainties.
How to stop doom spending
Besides impacting one's financial security, doom spending also often contributes to wasteful consumption and environmental concerns. People could engage in doom spending unconsciously or consciously just to relieve boredom. To stop doom spending, avoid temptation, set a budget, and shop with intent. If nothing works, consult a therapist or counselor if your excessive shopping behaviors are linked to emotional or psychological issues.
