11 Reasons Why Americans Continue Heavy Spending Despite High Inflation

Americans remain on an endless spending spree despite high-interest rates and inflation, which may cause us to go into recession. These trends baffle economists and investors that Americans are not being more cautious about spending.  They are spending more and saving less. Users were on a prominent Internet forum, and their conversation revealed some reasons for this trend.

1. Don’t Spend On Big Purchases

overspending Depositphotos 167344864 XL 1

An interesting theory is that since the country’s interest rates are so high, no one wants to make big purchases, but they feel safe enough to spend much money on smaller items. These items add up over time and appall those watching.

2. Inflation Is Stealing Your Money

Rising prices inflation shutterstock 2121759287
Photo Credit: Shutterstock

When inflation rises, there is a perception that the value of your money is lost. Because the prices of goods are rising, the money you have, particularly in savings, loses its purchasing power. Therefore that money that you have grows more worthless as inflation increases. When this happens, in the short term, sometimes people spend their money. They figured that since my savings may be worth less in the future, I should spend my money now rather than continue to let it lose value.

3. The Pandemic Changed Everything

Instant gratification spending Depositphotos 407075956 XL
Photo Credit: Deposit Photos

Simply stated, people don’t care anymore. After three years of the pandemic, they must do whatever they want and gratify their immediate desires. They are still determining if there will be a tomorrow, so why save when that’s not guaranteed? One commenter said, “People believe there is no future anymore. I have friends that act like every meal could be their last.”

4. Emotional Spending

Young emotional surprised woman clasping head in hands
Image Credit: Shutterstock.

A commenter created this idea: people aren’t thinking with their heads. They aren’t reasoning or thinking at all. They are acting emotionally in buying all this stuff. They want to feel good, and purchasing things makes them happy. They believe the world frightens them, and they need to feel good. They aren’t used to dealing with adversity, so they attempt to buy the comfort they don’t have.


YOLO shutterstock 701604967
Photo Credit: Shutterstock

Specifically, a commenter questioned what the statistics were regarding the people who were spending the most money. They guessed that Gen Z and Millennials would be the top spenders. They thought it would be the 20 and 30-year-olds who felt cheated out of two years of their lives during the pandemic and might think that things like home ownership were not for them. It could cause them to declare you only live once, so let’s spend that cash.

6. Pause

what college students can do this fall

During the worst part of the pandemic’s economic crunch, our government paused student loan payments, and many people might have forgotten about that. However, this may have given some of the more unwise former students a way to spend more money. Instead of having to make payments on their student loans or saving up for the eventual return of the loan payments, even they might have forgotten that they will have to start repaying those loans at some point. A forum user remembered this fact, and it does make sense.

7. Buy It On Credit

Teen with credit card
Image Credit: Shutterstock.

Where do people get all this money to spend wildly every weekend despite the high inflation, a bad jobs market, and an unstable economy? Multiple people responded with the same answer. They think that people are maxing out their credit cards at every opportunity, and they may be correct. A Federal Reserve Bank of San Francisco study found that credit cards were used for 28% of all purchases, the highest level ever. Statistics about credit card use in 2023 show an increase of $617.00 per person and a total debt of $5,474 per borrower over the totals in 2022.

8. Wealth Transfer

Boomers shutterstock 1121041805
Photo Credit: Shutterstock

This point starts with the Boomers. Many people from that generation have been retiring since the pandemic and have used the money in their retirement accounts for their expenses. One person referred to those accounts as being filled up during the most significant stock run-up in history.

The short version is that they have a lot of money to spend, and what they aren’t spending on themselves is likely going to their children, especially their grandchildren, which translates into more purchasing power.

9. Tax Season

Tax Refund shutterstock 90330334
Photo Credit: Shutterstock

It’s seasonal, but the yearly tax refund factors into this phenomenon. Some people wait for their yearly refund to make a large purchase or feel more comfortable spending money when that refund check rolls in.

10. Things Have Changed

Couples saving money
Image Credit: Shutterstock.

One user had a brainstorm about this countrywide spending binge, and what they said was that perhaps the entire paradigm had shifted. We might assume that everyone sees the wisdom in saving money, but what if the younger generations don’t think that saving money is worthwhile? What if they have come to the YOLO conclusion in a more permanent way? This commenter stated that he witnessed his friends do the same thing repeatedly.

They would spend all their money and then are mystified when the consequences of that action come at the end of the month. They don’t comprehend or have an understanding of how you could fix things. They didn’t know and had never considered saving money as a solution. 

11. A Recession May Be Looming

Recession fears shutterstock 2181774859
Photo Credit: Shutterstock

Many observe that as interest rates rise and banks have failed in recent months, credit is tightening, which may result in a recession caused by higher unemployment than the previous years. Red flags are now everywhere and signal a slower economy is coming, requiring us to be careful about spending too much money.

This thread inspired this post.  

12 Frugal Meals People Eat Even When They’re Rich. Do You?

Woman eating popcorn

Photo Credit: Shutterstock

When money isn’t a problem, people tend to indulge in all sorts of luxuries they couldn’t afford when they didn’t have excess money to spend. However, sometimes, even when money is easy, there are food items you can’t say “no” to. Here are some of the most addictive, economical meals you can eat, even when money is no issue.

12 Grocery Store Luxuries That People Love To Treat Themselves With

Woman buying grocery

Photo Credit: Deposit Photos

Sometimes, grocery shopping can be a chore. It can feel like just one more thing to get done during the week, so you don’t have to worry about it during the weekend. When money is tight, it can be even more overwhelming to try and get the best deals on food until you get to that one item you can’t resist. We all do it, splurging on that one food item we can’t do without. To that end, here are some of the most luxurious food choices people must have.

12 Dream Treats People Would Splurge on if Money Were Infinite

Woman with money

Photo Credit: Shutterstock

Imagine a reality where your bank account was bottomless and financial constraints vanished. What would you choose to splurge on? Here are 12 dream treats members of an online forum would throw their money at if money were no object.

10 Frivolous Things People Spend Their Money On When They Could Be Saving

woman wasting money

Image Credit: Dean Drobot From Canva.com

Are you spending your money frivolously on stupid things when dealing with a tight budget, or saving more for emergencies? We all do. Door Dash and Uber Eats? Need I say more? Between the higher menu prices, delivery fees, and tips, you can spend $35 on a single sandwich!

It’s absurd, and yet so many people do it. Worse, they know it’s a waste of money but will continue using the services. I’m guilty of using the delivery apps myself. Someone recently asked on an online forum for other examples of dumb things people waste their hard-earned cash on, and these are the top-voted responses.

Lovingly Limiting Loans: 10 Wise Ways To Set Money Boundaries With Family

Father lends money to son

Photo Credit: Shutterstock

Family ties are undoubtedly some of the strongest bonds in our lives. We share laughter, create lasting memories, and support each other through thick and thin. However, navigating boundaries can be complex when it comes to financial matters. Here are 12 wise ways shared by members of an online forum to set monetary limits with family members.

Leave a Comment