Americans are feeling anxious — so they’re ‘doom spending’

By CNN Newsource

Published November 10, 2024 1:00 am

By Erika Tulfo, CNN

(CNN) — Kelsea Palm was feeling out of sorts as the presidential election was approaching. So, she did what many Americans do when they’re feeling anxious: She went shopping.

The Wheaton College senior and her friend hit shops in Massachusetts the weekend before Election Day, and while Palm prides herself on shopping responsibly, she wound up impulse-buying a purse to ease her stress.

“It was a new thing that made us feel like we had some sort of control over our lives. We can vote, but what else can we do? We can get a bag that’ll make us happy,” she told CNN.

Palm is among the increasing number of consumers who cope with feelings of anxiety by “doom spending.”

Doom spending, or the practice of spending money to soothe fears about broader issues like politics or the economy, shows up everywhere from YouTube and TikTok videos to Reddit to personal finance discussions and data in surveys.

Gen Z and millennial consumers are also more likely to say it is better to treat themselves now rather than hold off for a future “that feels like it could change at any moment,” according to an Axios Vibes survey in June conducted by The Harris Poll.

While this kind of catharsis might work to temporarily allay worries, experts say doom spending poses a danger to consumers’ long-term financial health.

“We’re not always rational when it comes to our emotions, when it comes to our money,” said Courtney Alev, consumer financial advocate at Credit Karma. “It’s really easy to bury our heads in the sand and look for those quick dopamine hits when we’re feeling anxious or stressed.”

Why are we doom spending?

Alev says a third of Americans across all generations have a hard time rationalizing saving money due to feelings of uncertainty about current and future affairs, and a persistent sense of economic pessimism is partly to blame.

The economy President-elect Donald Trump is set to inherit is strong on paper, with a low unemployment rate and a projected economic growth rate better than other G7 economies.

Inflation has largely been tamed, too. But a lower rate of inflation doesn’t mean everyone is feeling its effects – and it doesn’t mean prices have come down. Only 37% of Americans said they approved of the economy, according to a CNN poll published in February.

Frustration surrounding the economy also played a major role in Trump’s victory as voters repeatedly cited it as their top issue, with 54% saying they trusted Trump to handle it better than his opponent Vice President Kamala Harris, according to a Gallup survey published in October.

Grocery costs and housing prices — two cornerstones of most consumers’ budgets — also continue to remain high, which translate into a less-than-rosy perception of economy.

“Inflation is slowing down, but for many people, what they see on the shelf in the grocery store is their reality,” said Sertan Kabadayi, a marketing professor at Fordham University’s Gabelli School of Business. “Since those prices are higher than last year, they still think that the economy is not in good shape and that the economy is getting worse.”

That financial gloom is powering doom spending and, in turn, driving up credit card debt. An August survey by Bankrate showed that half of American cardholders carry credit card debt from month-to-month, spurred on by sky-high interest rates before the Federal Reserve cut rates in September and again this week.

And, in the third quarter this year, credit card delinquencies surpassed pre-pandemic levels for the first time, according to a report from the Federal Reserve Bank of Philadelphia.

Beyond the economy, experts say that internet habits play a significant role in driving doom spending, especially for younger consumers.

More than half of Americans say they feel like they are constantly receiving bad news online, and it’s affecting how they spend their money, Bankrate data shows.

“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,” said Aja Evans, a financial therapist and author of “Feel Good Finance.”

She says “information overload” from online media paired with influencer culture and product advertisements can make consumers feel more tempted to open their wallets.

“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,’” Evans said.

How does the election factor in?

While the results of the election have already been decided, news about it hasn’t stopped.

“We expect a lot of young Americans to spend much of this next week online, scrolling social media, as they continue to digest election-focused content. Doing so could lead to even more charged feelings and drive further spending,” Alev said.

Political affiliation also plays a part in dictating how consumers are feeling about the economy. A recent study from the Brookings Institution found that economic sentiment tends to be positive for people whose political views align with the incumbent party.

Republican economic sentiment rose and Democratic economic sentiment fell when Trump first took office in 2017 and subsequently flipped during the Biden administration.

But Alev says that she anticipates a pop in spending whether Americans feel positively or negatively about the outcome of the election.

“Those who are upset with the results may spend to make themselves feel better, and those happy with the results may spend because it feels like a reward,” she said.

How do you curb doom spending?

Evans says the first step is self-awareness. Understanding your beliefs surrounding money and where they stem from can help you be more conscious of how you react to certain events and how they affect your spending habits.

She also emphasized the importance of unplugging and taking a step back from a pervasive internet culture.

“You literally need to go outside sometimes. Be in nature and just remind yourself that there is a world beyond the screen,” she said.

From there, she says that consumers can take steps to prevent destructive financial behaviors by engaging in other coping strategies to take their minds off their worries.

That might be as simple as going for a walk or calling a friend, or it might be something more active, like signing up for a class.

“If you can afford to spend, go ahead. But if you find yourself consistently putting yourself over your budget or feeling uncomfortable, then that’s the time to shift your behavior,” she said. “Recognize that you can get that dopamine hit from somewhere outside spending.”