Doom Spending

Shoppers are stretched, but discretionary spending isn’t abating as quickly as some finance chiefs and economists expected—a phenomenon economists and finance chiefs have coined “revenge” and even “doom” spending. And it has CFOs across industries—from travel to clothing, restaurants and consumer packaged goods—working to figure out what the impact is on balance sheets.

…The pandemic changed what motivated people to spend. Shoppers emerging from the pandemic with money to burn were eager to splurge, and this so-called revenge spending drove people to Taylor Swift and other concerts and led them to take trips and buy designer handbags. This boosted some companies’ profits as living in the moment took priority over saving for a home or rainy day. – WSJ

Consumers are remixing their spending back into services and entertainment outside of their homes after curtailing those activities during the pandemic..This normalization, combined with the cumulative impact of higher prices on consumer budgets, is resulting in continued soft trends in discretionary categories, most notably in home and hardlines. – Brian Cornell,  Target CEO