When should you cut spending in this economy? The economic malaise is straining the wallets of some consumers


In this uncertain economy, many consumers are preparing their wallets for a potential economic downturn. A current survey from financial services site Bankrate found that most Americans have put off something like a home renovation or leasing a car because of the economy.

The poll is just another example of people trying to navigate economic headwinds with what appears to be a bleak future. For consumers whose budgets are tightening, cutting back on spending is a strategy endorsed by Washington Post personal finance columnist Michelle Singletary.

“People want to buy things [but] there aren’t many things out there… [and] that can stop people spending, and it should,” Singletary told Marketplace’s David Brancaccio in our sequel Economic Pulse Series. “If you can’t do it, or you’re putting your finances at risk, you should back off and wait.”

The following is an edited transcript of their conversation.

David Brancaccio: You know, it’s such fun economics, but not a fun ha ha. We have inflation, but people are still getting jobs. So you’re still spending. It’s hard to know exactly which adjectives to use: the good ones or the bad ones.

Michelle single piece: Yes, it’s a really mixed bag for people. There are people who are doing well, who can demand a good salary because they are in demand. And once you get that good paycheck, you want to spend it, you want to do some things that you might not have been able to do, especially during the pandemic, you know, maybe buy a car, go on vacation, go to your aunt’s. And that drives up consumer prices. On the other hand, there are people who have suffered during the pandemic, who have lost their jobs. They’re still trying to climb back out, or maybe they were struggling before the pandemic and that’s only made it worse. And these people especially, they’re in a lot of pain right now, you know, when they go to the grocery store, just all the normal stuff — your rent goes up. And so there is great economic pressure on them. And you know, we go back and forth about, ‘Are we in a recession, is it an economic downturn? Will it turn the corner?” But for these people, they think, “Right now, my life, my financial life, is bad.”

Brancaccio: I know. And many people tell themselves it’s just not the right moment to try something big. There was this Bankrate poll late last week: The majority of adult Americans, you know, more than 53% have put off a big financial thing, you know, they wanted to remodel the bathroom, or they were thinking of finally getting it new car, because of their concerns about where this is going.

individual: And that’s the right thing. First of all, that’s what the Fed wants them to do, right? They want people to pull out because of all this demand. And it’s really a combination of demand and lack of supply. It’s these two together. So people want to buy things [but] There aren’t many things out there. And that can put a stop to people’s spending, and it should. If you can’t do it or it’s going to jeopardize your finances, you should back off and wait. On the other hand, if things are fine, you are employed, have money in your retirement account, are doing well, don’t let fear keep you from doing this home project. Because at the other end of those expenses is a business or someone who depends on your expenses for a living. So I don’t want people with money to spend [to] operate out of fear. But who knows that things will get a little tight should back off.

Brancaccio: And Michelle, before we get started real quick, you’re talking to someone who’s had dinner with a friend. What happened?

individual: [Laughter] I got an email with the subject line “Disgusting” and she said she and her husband were having dinner at a friend’s house. And she said, “Oh, what can I bring?” She brought some wine and dessert. And at the end of the meal, the friend said, “Oh, by the way, you owe me the takeout.” And it just made her angry. And that’s not unusual, I hear [it] often – it happened to me. Someone invited me to their birthday party and then said you have to pay for it. And I think sometimes with the advent of Cash App and Venmo and people being able to shoot[ing] For example, an email or text to someone who says, “Hey, you owe me that,” people think it’s okay to charge your guests. If it’s not, it’s rude. You should never burden your guests. If you’re the host, you should be the host. And that means you don’t charge your guests for enjoying your company.

Brancaccio: I’ve really upped my pizza game over the past year and they’re turning out pretty good. We invited people. I guess I better stop trying to figure out how much I could charge! I hear that from you. [Laughter]

Single: That is exactly right. Look, I think the trend is that people are living beyond their means. And it’s okay to celebrate those life events, but not on the backs of your friends. If you can’t afford to throw that restaurant birthday party, just invite people over, watch a movie, and pop some popcorn. You know, especially now that the economy is the way it is, you know if you really can’t afford it, don’t let your friends help supplement a life you can’t afford.

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