Something amazing happened after Donald Trump was elected as the 47th President of the United States. The Dow Jones Industrial Average (DJIA) surpassed 44,000 points for the first time in history. Then, a few weeks later, it briefly surpassed 45,000.
The stock market completely melted. Trump bump is pushing stock prices higher. Investors and speculators expect a bright future. And their intention is to exploit it for personal gain.
The general logic is that Trump is pro-growth and pro-business. His policies will free the economy from the shackles of burdensome and onerous regulations. He will force it on foreign competitors and make America great again. The company’s profits will soar. Therefore, the value of the stock will increase further.
Unfortunately, logic is the brain. Stocks are already priced for perfection. It will take more than a few quarters for the final results of Trump’s policies to have any positive effect on the economy. However, stock prices are rising as if performance improvement is imminent.
And what happens if a $2 trillion cut in government spending causes GDP to fall and unemployment to rise? Ultimately, this will be good for the long-term prospects of the economy. At first, things may get worse before they get better. There may be a significant stock market sell-off.
How everything plays out will be revealed in due course. But with Black Friday approaching and the Christmas shopping season officially starting, let’s check out what the almighty consumer is up to.
Buy now, pay later
Some Americans expressed their special gratitude for this year’s Thanksgiving blessings. This typically includes wealthy owners of stocks and other financial assets. Four decades of inflationary monetary policies have increased the country’s prosperity to astonishing levels. Now the Trump bump is pushing it even higher.
The rest of America has missed out on this special blessing through no fault of their own. They don’t own stocks and have never seen their wealth expand due to monetary inflation.
For example, wage earners have experienced stagnant inflation-adjusted earnings since the 1980s. Price increases for food, gas, and shelter have all surpassed the money that appears in biweekly paychecks. For them, moving forward was almost impossible.
Nonetheless, they keep going as they always have. American consumers, rich and poor alike, are determined to make this Christmas a memorable one.
According to gallopAmericans plan to spend an average of $1,014 on Christmas and other holiday gifts this year. This is a 9.8% increase from the $923 expected at this time last year. That’s also significantly higher than the 3.9 percent average increase in holiday sales over the past 18 years, according to the National Retail Federation.
Morgan Stanley also thinks consumers will grow. Actually, that exclusive investigation of U.S. consumers reported a 13% increase in holiday shopping this season. That’s more than three times the average.
How will they pay for it?
No doubt they will charge your credit card. The ‘buy now, pay later’ motivation will keep you entertained this Christmas.
expenditure of ruin
American consumers have a certain sixth sense about themselves. Many people now feel that times are getting worse. The future is dark.
In the past, expectations of a bleak future motivated people to tighten their belts. It’s about finding some nuts and hunkering down for the lean years ahead. Now this motivation is nodding.
Younger groups, namely Millennials and Generation Z, observe dark clouds on the horizon. But instead of saving and paying off debt, they are choosing to get by while they still can.
This is the rationale for the phenomenon of ruinous spending. But this isn’t entirely new. proverb “If you have a hard time, go shopping.” It’s been at least 40 years. But the World Wide Web has taken it to another level.
The first people do something called Doom Scrolling. They open a news site or their favorite social media platform on their iPhone. Then scroll down. They see story after story about how terrible the next president is, how global climate change will destroy the planet, and how terrible they are because they are Americans.
These stories, with headlines that evoke an emotional response, are designed to drive clicks. Publishers have discovered that negative headlines are much more attractive to readers. So they run more and more. But beyond getting clicks, the emotional response goes much deeper.
Doomscrolling all day can make consumers depressed. That’s when you get to the release. Something that makes you feel good, like spending money on credit in return for retail therapy.
Passionate pursuit of retail therapy
Axios Vibe inspection According to a June survey by The Harris Poll:
“A majority of Millennials and Gen Zers surveyed agree that it is better to treat yourself now than to put it off for a future that ‘feels like it could change at any time.’ Likewise, the majority agree that they deserve to make more expensive purchases ‘after surviving the past few years.’”
What do we offer?
An uncertain future has been the norm for humanity throughout human existence. People of a certain age may remember growing up with the prospect of nuclear extinction. This followed two world wars and the Great Depression.
Generations ago, we witnessed the death and destruction of the War Between the States. Somehow, these repeated bouts of ruin and destruction haven’t stopped people from saving, investing, having children, and striving for a better future.
The dawn of doom scrolling and doom spending seems to have struck the psyche of the younger generation. Moreover, it guarantees the very future they fear. Where economic prospects have been drained by debt slavery.
Of course, every problem has a solution. Often, what is more important than the actual solution is the promise of the solution. Because promise is where opportunity is found.
This is an important revelation discovered by Aja Evans. She has carved out a profitable niche as a ‘financial therapist’. Evans, author of the book ‘Feel Good Finance’, explains the problem and solution: next:
“What you follow and the messages you receive online can make you feel worse, increase anxiety and make the situation more miserable than it is. While you’re scrolling, you might be thinking, ‘You know what?’ The situation is really bad. I think it will make me feel better if I buy it.’”
Does it follow logic?
Adding holiday shopping into the mix and ruinous spending in the zealous pursuit of retail therapy is a recipe for feeling really good.
And it’s good for retail and good to boot.
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thank you,
minnesota gordon
for economic prism
A return to the economic prism in the passionate pursuit of retail therapy.
