“You only live once” may explain Americans’ continued spending spree
“You only live once” may explain Americans’ continued spending spree
A lot of Americans have been getting out of town.
“Last week, went down to Death Valley and then circled around to Tucson and went down to Mexico,” said Mark Pemble, a grocery store clerk near Boise, Idaho.
“We’re going in less than two weeks to France and then we’re gonna get on a Viking cruise on the Rhone River,” said Andy Shott, a retiree in Missoula, Montana.
“We went to Italy for two weeks last summer. We went on a nine-night cruise and then we did an 11-night cruise,” said Jennifer D’Alessandro, an academic in Buffalo, New York. “There was alcohol involved in that decision, I will say that.”
These consumers say they’re spending more than they were before the pandemic, partly because of a bigger financial cushion. Pemble’s wage at the grocery store is up — now $18 an hour — plus he got a bonus during the pandemic, and the value of his house has doubled. Shott and D’Alessandro saw some investments grow during the market boom.
Not all the money is going to travel. Pemble is spending more on clothing, Shott is golfing more often, and D’Alessandro and her husband are redoing their floors.
“You know, we’re not wealthy by any means, but we’re comfortable. We’re saving money,” said D’Alessandro. “What are we saving it for? We just are spending our money differently.”
Inflation has been sticky. Yet Americans continue to spend on vacations, cars and eating out. February retail sales show spending might be softening a bit. But this sustained period of activity is becoming puzzling.
Economist Aaron Klein at the Brookings Institution is still attributing it to pent-up demand.
“Given that you’ve paused a year or more of your life for many folks, when do you finally catch up to where you were before?” he said, adding that Americans’ emergency savings are dwindling and credit card debt is piling up, and growing interest rates won’t help.
But maybe something else is happening here: Maybe the American consumer is changing.
History shows that big crises can shake things up. There was World War I, which was followed by a growth in mass consumption and chain stores. There was World War II and the picturesque American dream: a single-family suburban home filled with stuff. And then, there was 9/11.
“The message we got from President Geroge W. Bush was ‘Let’s show the world that we have not been bowed by these terrorist attacks and we can show that by buying,'” said Liz Cohen, a history professor at Harvard University. “And I think that that was the message that people got after COVID. People were encouraged to spend not just for themselves, but for the good of the nation.”
You want to keep that restaurant in your neighborhood alive? Eat there more often and tip well.
70% of our gross domestic product does come from consumer spending. And that makes consumerism part of our national identity — and a part of how we feel about ourselves.
“I think most of our spending patterns are emotional related,” said Kristina Durante, a social psychologist and marketing professor at Rutgers University.
That can make us handle our money in different ways: “One of them is that when you’re stressed you save money, and one of them is that when you’re stressed you spend money,” she said.
But COVID stress didn’t just make us spend more — it made us spend differently.
“You know the pandemic really did focus us, tuned us into the here and the now,” said Durante. “That’s one thing that threats in the environment do. They sort of cut off our future vision.”
And a lot of people say this: that they’re not just making up for the lost time but spending to feel alive.
“So many people lost loved ones during that pandemic. And they were saving money and they had plans and they didn’t get to do those things,” said D’Alessandro.
“The fact that we’re getting closer to death every day whether we like it or not, what am I saving for?” said Shott.
“I want to feel as little isolated as possible. And I’m willing to spend to feel that connection with the rest of the world,” said Pemble.
Yeah, you only live once. But the pandemic has made a lot of people feel like they’ve been given a second chance.
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