Americans have spent 5.8% more in August 2023 than a year prior, which is a higher percentage than the 3.7% inflation seen in August 2023, according to a Wall Street Journal podcast.
Despite the reported cooling of inflation and the older generation’s emphasis in saving money to invest in the future, Americans are still spending their money rather than saving it.
According to several news outlets, people are choosing to spend rather than save due to a few different reasons.
Why are people saving less money?
The Wall Street Journal reported that consumer trends reporter Rachel Wolfe said that people these days are “prioritizing the experiences that make them happy now over perhaps longer-term saving goals.”
Wolfe continued, saying that, “in some cases, they’re willing to give up some degree of financial security and wealth in order to be happy in the moment.”
The Economist reported especially in regards to Gen Z and millennials, the “young people have always perplexed their elders,” when it comes to their spending habits.
“People are definitely spending. Retail sales rose seven-tenths of a percent last month, which easily outpaced inflation,” chief economics correspondent for NPR, Scott Horsley said on the “Weekend Edition Sunday” show. “We keep looking for consumer spending to lose a little steam at some point, especially as lower-income families run out of those savings they built up early in the pandemic.”
Why is it so hard to save money right now?
The New York Times reported that those in the 20s currently are struggling to save money due to student debt, inflation increasing the prices of food and the fact that the market today is a different scene than the generations that came before them.
“I feel like the older generation is constantly pushing you to do stuff like they did when they were in their 20s, but it’s not even comparable to when they were in their 20s,” social worker, Shea German-Tanner said.
Axios explained back in 2018 that the American economy and culture has changed so drastically since the mid-to-late-20th century to the point where 25-34 year-olds are still living with their parents.
The article further reported that the U.S. economy was “ripe for 30-year-old men,” in the mid-to-late-20th century as they were able to buy homes, support a larger family unit and land “well-paid careers.”
Millennials in 2018 were found to have median salaries that are “lower than the prior generation of 30-year-olds, and the financial burdens they carry are heavier, limiting how much their lifestyle can mirror that of their parents.”