Why Is America on a Spending Spree?

By: Anneken Tappe · November 01, 2023 · Reading Time: 2 minutes

Driving the Economy

Consumer spending is one of the main factors that moves the economy forward, accounting for about two-thirds of the U.S. GDP.

It’s also at the heart of recent recession worries, as economists have grown concerned high inflation could make consumers stop spending as their cost of living goes up.

But that hasn’t been the case so far. The economy grew at a healthy pace in the third quarter, as did spending, even though wage growth has underperformed inflation. Why?

Feeling Financially Secure

Americans are still splurging on concerts, movies, and even vacations, despite price increases across the board. It is helped by a few factors:

1.    A strong labor market. Job prospects have been bountiful over the last few years, and unemployment remains close to multi-decade lows.

2.    Savings stockpiles. Savings skyrocketed during the pandemic, and fueled savings has the economy reopened.

3.    The “Buy Now, Save Later” mentality. After seeing how quickly prices can rise, consumers might opt to lock in big purchases now, in case costs increase again.

But how long can this splurging continue?

While the spending frenzy is fueling America’s growth, it’s not helping people’s emergency savings, which many have fallen behind on as prices rose.

So when you treat a loved one to a nice gift on Black Friday, give yourself a pat on the back, too. You’re doing your part to keep the economy afloat.

Read more reporting here .

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

TLS 1.2 Encrypted
Equal Housing Lender