Following Donald Trump’s election as the 47th President of the United States, an extraordinary milestone was reached—the Dow Jones Industrial Average (DJIA) surpassed 44,000 points for the first time in history, eventually peaking above 45,000. This surge has sparked a notable upward spiral in the stock market, powered by optimism among investors and speculators who are keen to capitalize on this newfound economic momentum.
The prevailing belief is that Trump’s administration heralds a pro-growth, pro-business era. Many anticipate that the easing of restrictive regulations will invigorate the economy, empowering American industries to flourish and enabling corporate profits to soar, ultimately driving stock values even higher.
However, this optimism appears somewhat misguided. Stocks are already priced high, reflecting an expectation of perfection. Any potential benefits from Trump’s policies may take several quarters to manifest. Yet, share prices continue to rise as if an immediate influx of earnings is imminent.
Moreover, consider the ramifications of a proposed $2 trillion cut in government spending—which could lead to a decline in GDP and a rise in unemployment. Although this might be beneficial for the long-term health of the economy, it could trigger financial instability in the short term, potentially resulting in a significant market selloff.
While we will eventually know the outcome of these developments, the onset of Black Friday and the traditional Christmas shopping season prompts us to examine consumer behavior during these turbulent times.
Buy Now, Pay Later
This Thanksgiving, some Americans felt particularly fortunate, especially those with significant stock holdings and other assets. After forty years of inflationary policies, their wealth has surged to impressive heights, further boosted by the Trump bump.
In contrast, many Americans have not experienced these financial benefits. Due to circumstances beyond their control, they lack stock investments and are yet to see their wealth grow due solely to monetary inflation.
For instance, wage earners have grappled with stagnant, inflation-adjusted incomes since the 1980s, as rising costs for essentials like food, gas, and housing have outpaced the money that appears in their paychecks. For them, getting ahead remains an uphill battle.
Nevertheless, they persist. American consumers—both affluent and struggling—are determined to make this Christmas memorable.
According to Gallup, Americans plan to spend an average of $1,014 on Christmas and other holiday gifts this year, representing a 9.8 percent increase from last year’s forecasted $923. This figure surpasses the 3.9 percent average increase in holiday sales observed over the past 18 years, according to the National Retail Federation.
Morgan Stanley also predicts consumer spending will be robust. Their proprietary survey shows a 13 percent increase in holiday spending, significantly exceeding the historical average.
So, how will consumers finance these expenditures?
The answer is clear—they’ll rely heavily on credit cards. The impulse to ‘buy now and pay later’ is set to ensure that this Christmas remains festive.
Doom Spending
There’s an intriguing awareness among American consumers about the shifting tides of their financial future, and many perceive an impending downturn.
In the past, foreseeing a challenging future typically compelled individuals to save and prepare for tough times. However, this mindset has been turned upside down.
Younger generations, particularly millennials and Gen Z, are acutely aware of the storm clouds gathering but are choosing to indulge rather than save—living life to the fullest while they still can.
This behavior has given rise to the term “doom spending.” While the idea itself isn’t new—after all, the phrase “when the going gets tough, the tough go shopping” has persisted for decades—its manifestation has evolved with the advent of the internet.
Today, individuals engage in “doom scrolling,” endlessly browsing news sites or social media on their devices. They encounter troubling stories about politics, environmental crises, and the burdens of modern life—all designed to provoke emotional reactions and boost clicks for publishers. By emphasizing negative headlines, media outlets exploit readers’ emotional responses, leading to a deeper sense of despair.
After immersing themselves in this gloom, it’s not surprising that consumers seek relief through purchasing, opting for retail therapy to lift their spirits.
The Zealous Pursuit of Retail Therapy
A recent Axios Vibes survey conducted by The Harris Poll uncovered that:
“A majority of surveyed millennials and Gen Z’ers agree it is better to treat themselves now rather than hold off for a future ‘that feels like it could change at any moment.’ Similarly, a majority agree they deserve more expensive purchases ‘after surviving the last few years.’”
This raises an important question: Why do we feel this way?
Throughout history, uncertainty has been a constant companion for humanity. Many older individuals recall growing up during periods marked by the threat of nuclear war, following two world wars and a great depression. Earlier generations faced the grave consequences of the Civil War while still striving to save, invest, and pursue better futures.
Unfortunately, today’s trends of doom scrolling and doom spending seem to be dampening the spirit of younger generations. Ironically, this approach may be ushering in the very future they dread—one shackled by debt.
Nevertheless, every challenge presents a potential solution. Sometimes, the mere promise of a solution can open the door to new opportunities.
Aja Evans, a financial therapist and author of “Feel Good Finance,” emphasizes this crucial insight. She suggests that:
“What you’re following and the messages that you are receiving online can make you feel worse, increase your anxiety, and make things feel more dire than they are. When you’re in the midst of scrolling, you might think: ‘You know what? Things are just really bad. I’m going to feel better if I purchase.’”
It’s a cycle of logic worth considering.
When holiday shopping is factored in, the combination of doom spending driven by a fervent desire for retail therapy creates a perfect storm for heightened consumer spending.
And while this may not solve deeper financial issues, it certainly benefits retailers during the holiday season.
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Sincerely,
MN Gordon
for Economic Prism
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