Consumer confidence in where the economy is headed hit a 12-year low this week, according to the Conference Board. A fresh reading out of University of Michigan today also showed a deterioration in overall sentiment with a 12% drop from February, marking the third month of decline.
Despite Americans’ concerns about the economy, they seem to be spending more. Roughly one in five Americans are shopping out of fear of future price hikes, which some experts refer to as doom spending.
Doom spending means making impulsive purchases largely driven out of fear over what the future may bring. In some cases, it’s a kind of retail therapy, but it can also be a strategy to get ahead of economic uncertainty.
“People are worried for a number of reasons,” Wendy De La Rosa, a Wharton professor who studies consumer behavior, told CNBC. “We as humans hate uncertainty and are averse to volatility. And so when there’s whiplash happening at a national level as to what tariffs are happening with which country and how it’s going to affect our domestic industries, that makes people really nervous.”
Consumer spending came in softer than expected in last month, but overall sales continued to grow steadily amid mounting fears of an economic slowdown and inflation.
It’s not just consumers who are concerned. Major companies, such as Walmart, Delta, and American Airlines, along with the Federal Reserve and Wall Street are all signaling uncertainty. The S&P 500 dropped 10% from record highs in February, suggesting investor fears over an economic slowdown.
Watch the video above to learn why Americans are spending more even in tough times and what this pattern means for the economy.