You’ve heard of doomscrolling, now get ready for doom spending.
A new report published by consulting firm Simon-Kucher found a dramatic increase in year-over-year holiday spending by Generation Z, or people born between 1997 and 2012. The study dubs this trend of young consumers spending more than they can afford to experience short-term gratification “doom spending.”
Doom spending is essentially an offshoot of doomscrolling the study says, explaining that members of Gen Z are most likely to purchase things as a coping mechanism because they feel pessimistic about the future after spending excessive time scrolling through negative online content.
“I didn't coin the term, but I found it very interesting,” said Shikha Jain, a Simon-Kucher partner who worked on the report.
She said doom spending is a coping mechanism for stress.
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"It involves impetuous purchases that offer this short-term delight but can cause long-term financial strain," she said. "It’s more than just impulse buys or retail therapy.”
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Members of Gen Z said they planned to spend about 21% more than last year during the holidays, according to the report's survey of 1,000 U.S. consumers. In contrast, researchers found Millennials – born from 1981 to 1996 – planned to spend 15% more, Members of Generation X planned to spend 5% more, and Baby Boomers planned to spend 6% more.
Younger people growing up, entering the workforce and earning more money does not alone explain this “doom spending” trend, Jain told USA TODAY.
If these trends were happening year over year, it would make sense, she said, "But the fact that it’s such a jump from last year to this year, says that it’s very much a more recent thing.”
Members of Gen Z and Millennials are also more likely to get gift ideas from social media and to opt for Afterpay, a service that allows you to pay over time,the report found. They are more influenced by time spent scrolling online and more likely to spend beyond their budgets than older generations, the report said.
While credit cards and buy now/pay later agreements have been around for decades, Jain says “doom spending" is a relatively new phenomenon with no direct historical comparison. She added that it shows just how pessimistic today’s young people are about the future.
“All of these negative events and constant fear and literally doom and gloom that younger consumers are exposed to – geopolitics, macro-environment, local and social news – they just grew up in a very non-sheltered life compared to other generations,” Jain said of Gen Z. “They don’t have many ways to self-soothe or cope.”
While some find refuge in “doom spending” others escape to the world of self-care, but that path is also often expensive.
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