Economic malaise tightens some consumers’ pocketbooks
Economic malaise tightens some consumers’ pocketbooks
In this uncertain economy, many consumers are preparing their pocketbooks for a potential economic downturn. A recent survey from the financial services site Bankrate found that most Americans have put off something like a home renovation or leasing a car because of the state of the economy.
The survey is just one more illustration of how people are trying to navigate economic headwinds with a seemingly gloomier future ahead. For consumers whose budgets are getting increasingly tight, cutting back spending is a strategy endorsed by Michelle Singletary, personal finance columnist for The Washington Post.
“People want to buy stuff, [but] there’s not a lot of things out there … [and] that can put a stop on people spending, and it should,” Singletary said to Marketplace’s David Brancaccio as part of our ongoing Economic Pulse series. “If you can’t make that happen, or it’s going to jeopardize your finances, you should pull back and wait.”
The following is an edited transcript of their conversation.
David Brancaccio: You know, it’s such a funny economy, but not funny “ha ha.” We have inflation, yet people are still getting jobs. So they’re still spending. It’s hard to know exactly which adjectives to use: the good ones or the bad ones.
Michelle Singletary: Yeah, it’s a really mixed bag for folks. There are people who are doing well, they can demand a good salary because they are in demand. And once you get that good paycheck, you want to spend it, you want to do some things that you may not have been able to do, especially during the pandemic, you know, maybe buy a car, take a vacation, go see Auntie. And so that is driving up consumer, you know, prices. On the other hand, there are people who suffered during the pandemic, lost their jobs. They’re still trying to climb back out, or maybe they were struggling before the pandemic hit and it just made it worse. And those folks, in particular, are experiencing a lot of pain right now, you know, going to the grocery store, just all the regular things — your rent is going up. And so there’s a lot of economic pressure on them. And you know, we go back and forth about “Are we in a recession, is it an economic downturn? Is it going to turn the corner?” But for these people, they’re thinking, “Right now, my life, my financial life is bad.”
Brancaccio: I know. And many people are saying to themselves, it’s just not the right moment to splash out on something big. There was this Bankrate survey late last week: a majority of U.S. adults, you know, more than 53% have delayed a big financial thing, like, you know, they were going to renovate the bathroom, or they were thinking of finally getting that new car, because of their concerns about which way this is going.
Singletary: And that’s the right thing to do. First of all, that’s what the Fed wants them to do, right? They want people to pull back because of all this demand. And it’s really a combination of demand and lack of supply. It’s those two together. So people want to buy stuff, [but] there’s not a lot of things out there. And so that can put a stop on people spending, and it should. If you can’t make that happen, or it’s going to jeopardize your finances, you should pull back and wait. On the other hand, if things are okay, you’re solidly employed, you’re putting money in your retirement account, you’re doing okay, don’t let fear stop you from doing that home project. Because on the other end of that expense is a business or someone who’s depending on your spending for their livelihood. So I don’t want people that can spend, [to] operate out of fear. But those who know that things are a little tight, you should pull back.
Brancaccio: And Michelle, before we go real quick, you talk to somebody who got together with a friend for a meal. What happened?
Singletary: [Laughter] I got an email, the subject line said, “Disgusted,” and she said she and her husband were invited to a friend’s home for a meal. And she said, “Oh, what can I bring?” She brought some wine and dessert. And at the end of the meal, the friend said, “Oh, by the way you owe me for the takeout.” And it just enraged her. And this is not out of the ordinary, I hear [it] oftentimes — it’s happened to me. Someone invited me to their birthday party and then said you got to pay for it. And I think sometimes with the advent of Cash App and Venmo and people being able to, you know, shoot[ing] an email or texting someone saying, “Hey, you owe me for this,” people think that it’s okay to charge your guests. It is not, it’s rude. You should never charge your guests. If you are the host, you should be hosting. And that means that you don’t charge your guests for the pleasure of your company.
Brancaccio: I really upped my pizza game in the last year and they’re coming out pretty fine. We’ve been inviting people over. I guess I better stop trying to figure out how much I could charge! That’s what I’m hearing from you. [Laughter]
Singletary: That’s exactly right. Listen, I think the trend is all about people are living above their means. And it’s fine to celebrate these life events, but not on the back of your friends. If you can’t afford to have that birthday bash at the restaurant, just have folks over, watch a movie, pop some popcorn. You know, especially now with the economy the way it is, you know, if you truly can’t afford it, don’t make your friends help supplement a life that you can’t afford to do.
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