- Gen Z has gotten so caught up in the negative news cycle that it’s affecting their spending habits. A new study shows Gen Z is spending 21% more than they did last year on holiday shopping to deal with the effects of doomscrolling.
It’s been a tumultuous end of the year across the board. Just in the past few months, there were major hurricanes, the U.S. presidential election, and the killing of a CEO. That’s led to countless hours of doomscrolling on social media—particularly for millennials and Gen Zers.
But the current political, environmental, and economic turmoil has also led to a revival of “doom spending.” This occurs when consumers spend frivolously—often with money they don’t have—for both short-term and long-term gratification.
A new report by consulting firm Simon-Kucher shows Gen Z plans to spend almost 21% more this holiday season than last year. Gen Z is also more likely to spend money on beauty, furniture, fashion accessories, pets, books and magazines, and trips and experiences than any other generation, according to the report.
To break it down even further, Chad Olivier, certified financial planner and CEO of The Olivier Group financial advisory, told Fortune he sees Gen Z women doom spending the most on clothing and shoes, and young men on gaming.
That follows a 2023 report by Psychology Today that showed 27% of survey respondents had admitted to doom spending, and 32% had taken on more debt in the past six months.
Although the rise of social media led to doom spending, it “is not an entirely new concept,” James N. Mohs, an associate professor of accounting and taxation at University of New Haven, told Fortune. In fact, it started back in the late 1960s with the hippie generation, he said, with no-worries songs like “Let’s Live for Today” by the Grassroots.
But considering political and economic pressures, doom spending is seeing a resurgence. Bruce Y. Lee, a professor of health policy and management at the City University of New York (CUNY) School of Public Health, explained doom spending’s comeback bluntly in the Psychology Today study.
“‘Doom spending occurs when you are stressed about things like the growing economic disparity between you and the super-rich, the political mess in the U.S., the climate mess everywhere, and all of the other stuff … and then end up buying more things to cope with the stress,” wrote Lee, who also serves as executive director of the Center for Advanced Technology and Communication in Health at CUNY.
And social media is dually to blame for doom spending, especially with its tendency to push advertisements in front of Gen Zers. In the past, Gen Z used the internet to browse for products they might purchase, but now, constant advertising “leads them to spend more carelessly because it's hitting them throughout so much of their day on a regular basis,” Olivier said.
Gen Z spending habits
During these challenging times, adding items to your cart and checking out can provide a sense of control, plus a “powerful rush” of feel-good chemicals like dopamine, serotonin, and endorphins, Brianna Paruolo, a psychotherapist, told Fortune. These chemicals help ease stress and uncertainty—but that’s only temporary, she said.
And it’s not just the instant gratification that fuels doom spending. Purchasing an item or booking a trip gives consumers something to look forward to in dark times.
“People often unconsciously attach deeper meaning to their purchases. These purchases often carry the weight of hoped-for transformation,” Paruolo said. “There's an underlying belief that this particular item might be the key to ‘fixing’ their current struggles or improving a challenging situation.”
This new trend also traces the pattern of Gen Z’s incredibly high expectations for wealth and personal finances. A recent survey from financial firm Empower showed Gen Zers, on average, believe an annual salary of $587,797 and net worth of $9.47 million are needed to achieve “financial success.”
That’s a far cry from the $48,000 salary they currently make, on average, according to an analysis of U.S. Census Bureau data by The College Investor. Meanwhile, Gen Z also continues to drown in debt from the wave of “buy now, pay later” services and continued use of credit cards. In fact, Gen Z and millennials are experiencing debt growth faster than any other generation, according to Credit Karma.
“The reality is that young people entered the holiday shopping season in the red, and we expect them to enter into the new year even further in the red,” Courtney Alev, a consumer financial advocate at Credit Karma, told Fortune. “For those who are already entering the shopping season with elevated credit card balances, this can be a very slippery slope, making it even more difficult to climb out of high-interest debt.”
