4 ms·

Americans Are Still Spending Like There’s No Tomorrow

34 points by lxm 3y ago

ruined 3y ago
there is no tomorrow
- happytoexplain 3y ago
  I know this is curt, but it's the first thing that came to my mind as well. There's a threshold of what I can only describe as mundane misery past which it is very difficult psychologically and logistically to plan long-term, and tons of people are past that line. It is not a financial line. The majority instinct is to blame those people as personally irresponsible. But that is always unrealistic at scale. This problem in particular has progressed beyond easy answers at this point.
  - BLKNSLVR 3y ago
    Somewhat analogous to the "if you owe the bank $10,000 then you've got a problem" but "if you owe the bank $1,000,000 then the bank's got a problem". If an unsustainable percentage of the population is beyond your mundane misery line then it's society's problem.
- pizzafeelsright 3y ago
  Oh there is and it is coming.
- jimt1234 3y ago
  I had a roommate back in the 90s that spent and managed his money like a drunk sailor. Dude had tons of debt. He didn't seem to care, though. He was happy as could be, while I was stressing to pay off college loans and save every nickel I earned. I discussed his situation with him once, thinking he was just too stupid to understand. He told me his philosophy was to get what you wanted when you can because "tomorrow is not guaranteed". I still thought he was living irresponsibly, so I pressed further. Then he got really serious, told me that his older brother was his hero growing up; he was a super nice guy that everyone loved and knew he was going places in life. His brother got killed by a drunk driver on prom night (the driver's prom). I sorta understood after that.
ftyers 3y ago
https://archive.ph/02xw3 https://archive.ph/02xw3
deleted 3y ago
[deleted]
MuffinFlavored 3y ago
I had an interesting thought. I was in the market to buy a house during like... 2019-2021. What "was supposed to be" say... a $450k 3/2 house became $540k during "the COVID pandemic housing gold rush" when rates were 3.25% with everybody bored, willing to have a bidding war (low supply, high demand... how all of these families were able to afford what felt like $200k inflated prices, I guess because of the "funny money" equity inflation in their house and they just rolled it over?) (Unrelated but Zillow says at 7.5% interest rates that house is now $750k+, weird... makes no sense... counter-intuitive, except for how tight the supply/demand situation must be) Long story short... I never made that move. I kept renting. Probably "below my means". Then I put a bunch of money into a money market fund that yields 5%. So... the Fed is raising rates to 5% to try and slow inflation. But now I'm earning 5% on a bunch of money to the point that it basically offsets my rent. So now I have more money to spend/am less financially "tight"... doesn't that contribute to inflation? me having an "oversupply" of money will increase my demand for... travel, frivolous purchases (which was the original problem when business owners got more than what they needed influx wise with PPP loans, or consumers getting "covid relief" and then spending it on things that trickled up to business owners, etc.)
- UncleOxidant 3y ago
  > So... the Fed is raising rates to 5% to try and slow inflation. But now I'm earning 5% on a bunch of money to the point that it basically offsets my rent. ... doesn't that contribute to inflation? I don't think your case is all that common. The vast majority of people don't have that much money such that they could earn say $1500+/month with rates at 5%. Offsetting you are a whole lot of people who only have a few thousand dollars available in case of emergency and many more who don't even have that. (that said, I'm really enjoying making 5.5% on tbills.)
  - pimlottc 3y ago
    I’m not a finance expert but don’t you need something like $350000 in the bank to make $1500/mo in interest? https://www.calculator.net/interest-calculator.html?cstartingprinciple=350%2C000&cannualaddition=0&cmonthlyaddition=0&cadditionat1=beginning&cinterestrate=5&ccompound=annually&cyears=5&cmonths=0&ctaxtrate=0&cinflationrate=3&printit=0&x=Calculate#interestresults https://www.calculator.net/interest-calculator.html?cstartin...
jimt1234 3y ago
https://www.youtube.com/watch?v=R3ZJKN_5M44 https://www.youtube.com/watch?v=R3ZJKN_5M44
jackmott42 3y ago
We aren't buying more stuff, stuff is just more expensive.
- gruez 3y ago
  >Americans spent 5.8% more in August than a year earlier, well outstripping less than 4% inflation. Emphasis mine
deleted 3y ago
[deleted]
deleted 3y ago
[deleted]
BLKNSLVR 3y ago
Interesting anecdotal examples of these people wilfully sacrificing longer term goals for short term satisfaction. It feels like a semi-predictable outburst of the-need-for-joy following the dour years of Covid lockdowns and travel restrictions and general down-sentiment; a society-wide emotional pressure relief valve. I can't see it playing out as any kind of long-term pattern because it's unsustainable, but having said that, there are 300 million Americans with different scales of tolerance, and so the relief valve could be steaming along for quite some time. The sustainability being how willing people are to work longer in life to pay off their debts. What happens when an increasing number of people die with debts? Is this a likely scenario?
- TerrifiedMouse 3y ago
  > It feels like a semi-predictable outburst of the-need-for-joy following the dour years of Covid lockdowns and travel restrictions and general down-sentiment; a society-wide emotional pressure relief valve. According to the article, it seem more like the onset of a doomer mentality. Why save for a tomorrow that you might not live to see? What if all your sacrifice and planning is for naught? Better to experience life now when you are healthy as you might not be in the future (e.g. long covid, dead, ...) and can no longer do so. I think everyone subconsciously does a risk-benefit analysis. The more uncertain things are, i.e. higher risk, the more ROI you demand from your investments. If investments aren't giving you the returns you want for a certain level of risk ... you just don't invest - which is what this is about; uncertainty has reduced the attractiveness of long term investment for people and making (less risky) short term investments comparatively more attractive.
  - lotsofpulp 3y ago
    > According to the article, it seem more like the onset of a doomer mentality. >Why save for a tomorrow that you might not live to see? Wanting to set a floor for quality of life for your children?
    - BLKNSLVR 3y ago
      Going by society's (total fucking lack of) reaction to climate change, there is only a preciously small percentage of people who care much at all for the quality of life of their children. ... which explains how we got here in the first place.
pcurve 3y ago
Summary: Americans are spending a lot of money on vacations and fun experiences that they might've otherwise put off, because they are prioritizing to enjoy life now than later. Inflated housing prices made savings almost pointless and COVID crisis taught them about fragility of life.
- hackernewds 3y ago
  So because housing is expensive, Americans are making even poorer choices by saving less for them? Make it make sense.
  - willis936 3y ago
    Simple: housing affordability is racing out of reach at an accelerating rate. There is no future where the savings lift them into the landowning class, so they decide to not be as miserable as they could be if they futilely saved for something that would never happen.
    - justaguitarist 3y ago
      Exactly. My partner and I live in a big city and both make north of $80K, but there's no reality in which we can purchase a house when offers are coming in 10% above asking/waiving all inspections/all cash/etc. So we are choosing to put that house fund towards having an actual wedding (instead of a courthouse one like we originally planned), traveling, and putting a small amount back for emergencies.
  - xboxnolifes 3y ago
    houses aren't the only thing in the equation.
friend_and_foe 3y ago
Well what do you expect? Life is a game of incentives. When your savings devalue 40% a decade you can't save money. When a politician talks about "stimulating the economy" what they're talking about getting people to blow their money. When they then go on to talk about how the average american can't cover an emergency expense of a thousand dollars, remind them who's fault that is. Money velocity comes at the expense of savings.

34 points by lxm 3y ago

ruined 3y ago

there is no tomorrow

happytoexplain 3y ago
I know this is curt, but it's the first thing that came to my mind as well. There's a threshold of what I can only describe as mundane misery past which it is very difficult psychologically and logistically to plan long-term, and tons of people are past that line. It is not a financial line. The majority instinct is to blame those people as personally irresponsible. But that is always unrealistic at scale. This problem in particular has progressed beyond easy answers at this point.
- BLKNSLVR 3y ago
  Somewhat analogous to the "if you owe the bank $10,000 then you've got a problem" but "if you owe the bank $1,000,000 then the bank's got a problem". If an unsustainable percentage of the population is beyond your mundane misery line then it's society's problem.
pizzafeelsright 3y ago
Oh there is and it is coming.
jimt1234 3y ago
I had a roommate back in the 90s that spent and managed his money like a drunk sailor. Dude had tons of debt. He didn't seem to care, though. He was happy as could be, while I was stressing to pay off college loans and save every nickel I earned. I discussed his situation with him once, thinking he was just too stupid to understand. He told me his philosophy was to get what you wanted when you can because "tomorrow is not guaranteed". I still thought he was living irresponsibly, so I pressed further. Then he got really serious, told me that his older brother was his hero growing up; he was a super nice guy that everyone loved and knew he was going places in life. His brother got killed by a drunk driver on prom night (the driver's prom). I sorta understood after that.

ftyers 3y ago

https://archive.ph/02xw3 https://archive.ph/02xw3

deleted 3y ago

[deleted]

MuffinFlavored 3y ago

I had an interesting thought. I was in the market to buy a house during like... 2019-2021. What "was supposed to be" say... a $450k 3/2 house became $540k during "the COVID pandemic housing gold rush" when rates were 3.25% with everybody bored, willing to have a bidding war (low supply, high demand... how all of these families were able to afford what felt like $200k inflated prices, I guess because of the "funny money" equity inflation in their house and they just rolled it over?) (Unrelated but Zillow says at 7.5% interest rates that house is now $750k+, weird... makes no sense... counter-intuitive, except for how tight the supply/demand situation must be) Long story short... I never made that move. I kept renting. Probably "below my means". Then I put a bunch of money into a money market fund that yields 5%. So... the Fed is raising rates to 5% to try and slow inflation. But now I'm earning 5% on a bunch of money to the point that it basically offsets my rent. So now I have more money to spend/am less financially "tight"... doesn't that contribute to inflation? me having an "oversupply" of money will increase my demand for... travel, frivolous purchases (which was the original problem when business owners got more than what they needed influx wise with PPP loans, or consumers getting "covid relief" and then spending it on things that trickled up to business owners, etc.)

UncleOxidant 3y ago
> So... the Fed is raising rates to 5% to try and slow inflation. But now I'm earning 5% on a bunch of money to the point that it basically offsets my rent. ... doesn't that contribute to inflation? I don't think your case is all that common. The vast majority of people don't have that much money such that they could earn say $1500+/month with rates at 5%. Offsetting you are a whole lot of people who only have a few thousand dollars available in case of emergency and many more who don't even have that. (that said, I'm really enjoying making 5.5% on tbills.)
- pimlottc 3y ago
  I’m not a finance expert but don’t you need something like $350000 in the bank to make $1500/mo in interest? https://www.calculator.net/interest-calculator.html?cstartingprinciple=350%2C000&cannualaddition=0&cmonthlyaddition=0&cadditionat1=beginning&cinterestrate=5&ccompound=annually&cyears=5&cmonths=0&ctaxtrate=0&cinflationrate=3&printit=0&x=Calculate#interestresults https://www.calculator.net/interest-calculator.html?cstartin...

jimt1234 3y ago

https://www.youtube.com/watch?v=R3ZJKN_5M44 https://www.youtube.com/watch?v=R3ZJKN_5M44

jackmott42 3y ago

We aren't buying more stuff, stuff is just more expensive.

gruez 3y ago
>Americans spent 5.8% more in August than a year earlier, well outstripping less than 4% inflation. Emphasis mine

deleted 3y ago

[deleted]

deleted 3y ago

[deleted]

BLKNSLVR 3y ago

Interesting anecdotal examples of these people wilfully sacrificing longer term goals for short term satisfaction. It feels like a semi-predictable outburst of the-need-for-joy following the dour years of Covid lockdowns and travel restrictions and general down-sentiment; a society-wide emotional pressure relief valve. I can't see it playing out as any kind of long-term pattern because it's unsustainable, but having said that, there are 300 million Americans with different scales of tolerance, and so the relief valve could be steaming along for quite some time. The sustainability being how willing people are to work longer in life to pay off their debts. What happens when an increasing number of people die with debts? Is this a likely scenario?

TerrifiedMouse 3y ago
> It feels like a semi-predictable outburst of the-need-for-joy following the dour years of Covid lockdowns and travel restrictions and general down-sentiment; a society-wide emotional pressure relief valve. According to the article, it seem more like the onset of a doomer mentality. Why save for a tomorrow that you might not live to see? What if all your sacrifice and planning is for naught? Better to experience life now when you are healthy as you might not be in the future (e.g. long covid, dead, ...) and can no longer do so. I think everyone subconsciously does a risk-benefit analysis. The more uncertain things are, i.e. higher risk, the more ROI you demand from your investments. If investments aren't giving you the returns you want for a certain level of risk ... you just don't invest - which is what this is about; uncertainty has reduced the attractiveness of long term investment for people and making (less risky) short term investments comparatively more attractive.
- lotsofpulp 3y ago
  > According to the article, it seem more like the onset of a doomer mentality. >Why save for a tomorrow that you might not live to see? Wanting to set a floor for quality of life for your children?
  - BLKNSLVR 3y ago
    Going by society's (total fucking lack of) reaction to climate change, there is only a preciously small percentage of people who care much at all for the quality of life of their children. ... which explains how we got here in the first place.

pcurve 3y ago

Summary: Americans are spending a lot of money on vacations and fun experiences that they might've otherwise put off, because they are prioritizing to enjoy life now than later. Inflated housing prices made savings almost pointless and COVID crisis taught them about fragility of life.

hackernewds 3y ago
So because housing is expensive, Americans are making even poorer choices by saving less for them? Make it make sense.
- willis936 3y ago
  Simple: housing affordability is racing out of reach at an accelerating rate. There is no future where the savings lift them into the landowning class, so they decide to not be as miserable as they could be if they futilely saved for something that would never happen.
  - justaguitarist 3y ago
    Exactly. My partner and I live in a big city and both make north of $80K, but there's no reality in which we can purchase a house when offers are coming in 10% above asking/waiving all inspections/all cash/etc. So we are choosing to put that house fund towards having an actual wedding (instead of a courthouse one like we originally planned), traveling, and putting a small amount back for emergencies.
- xboxnolifes 3y ago
  houses aren't the only thing in the equation.

friend_and_foe 3y ago

Well what do you expect? Life is a game of incentives. When your savings devalue 40% a decade you can't save money. When a politician talks about "stimulating the economy" what they're talking about getting people to blow their money. When they then go on to talk about how the average american can't cover an emergency expense of a thousand dollars, remind them who's fault that is. Money velocity comes at the expense of savings.