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    • How election anxiety is changing Americans’ spending habits
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    How election anxiety is changing Americans’ spending habits

    Online Niel Posted on

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    The 2024 elections are not only dividing the country and triggering heated conflicts in the family and at work.

    It affects how people spend – or don’t spend – their hard, cold cash.

    Forty-four percent of young adults say they are spending less on things like dining, entertainment and memberships because of the election or economic uncertainty, according to an online survey of 1,500 18- to 44-year-olds in September and October by Monarch, a personal finance app and website. Monarch conducted the poll, the results of which were provided exclusively to USA TODAY, with polling software created by Centiment.

    Monarch officials said survey respondents likely understood “economic uncertainty” to mean election-related, based on other survey questions.

    Nearly a quarter of millennials (ages 28-44) and Gen Zers (18-27) surveyed also said they were putting off major purchases like homes and cars until after the election.

    How does government affect inflation?

    Much of the spending pullback is likely related to fears that the presidential candidate they are opposing could ramp up inflation, said Rachel Lawrence, a certified financial planner and head of advisory for Monarch. Inflation hit a 40-year high of 9.1% in mid-2022, before gradually easing to 2.4% in September. But many Americans are still bothered by high prices.

    “I hear a lot of concern that inflation is going to go up and that things are getting more expensive,” Lawrence said. “A lot of people are spending less to make sure they have (money) to do other things.”

    Republicans fear Democratic Vice President Kamala Harris will raise taxes and government spending, pushing up consumer prices. Democrats fear former Republican President Donald Trump will follow through on vows to impose high tariffs that will raise costs on a wide range of imports.

    Will the Fed raise interest rates again?

    Millennials and Gen Zers, meanwhile, are delaying big purchases, in part because they fear another spike in inflation could force the Federal Reserve to raise interest rates again or lower them more slowly now that they’re cutting rates, making financing a home or of a more expensive car. .

    Melissa Cullens, 42, of Westchester, N.Y., said she and her husband want to renovate their upstairs master bathroom at a cost of $20,000, but are not concerned that Trump’s tariffs or other policies could hinder the economy.

    “Not only would our housing values ​​plummet,” she said. She also questions the idea of ​​investing money “as opposed to liquidating it” in the event of a recession. “You’re going to want to have cash… There’s so much of a sense of pent-up anticipation.”

    Republicans seem more nervous than Democrats that prices could rise if their candidate loses. According to the Monarch poll, 33 percent of Republicans are putting off big purchases, compared to 25 percent of Democrats. And about 54 percent of Republican millennials spend less on dining and other discretionary purchases, compared to 42 percent of Democratic millennials.

    And while they’re older and generally have higher incomes, millennials are more cautious than Gen Z, with 48% cutting back on discretionary spending compared to 37% of their Gen Z counterparts.

    “I think they’re in a space of life where there’s so much going on,” Lawrence said of Millennials. Many, she said, are raising families, buying homes and caring for both children and aging parents.

    Young people may also delay purchases because they think they’ll get a better deal if one or the other candidate wins, said Marcie Merriman, leader of cultural strategies and insights for EY-Parthenon, a consulting firm. For example, Harris proposed giving $25,000 in down payment assistance to first-time home buyers. Trump is proposing lower taxes, which could leave Americans with more money to spend.

    Is consumer spending rising or falling?

    If people cut back on their spending because of the election, there is little clear evidence that it affects the overall economy. Consumer spending rose at a robust annual rate of 3.7 percent in the third quarter and the economy grew a healthy 2.8 percent, the government said in an Oct. 30 report. Lawrence said Americans could cut spending only modestly. Spending is also likely to be even stronger without pre-election anxiety.

    At the same time, youth frugality is driven by more than pocketbook concerns, Lawrence said. After the insurrection of January 6, 2021, many young people, especially Democrats, worry about another similar episode after the upcoming vote.

    “People think there’s a chance that democracy isn’t what they thought it was,” Lawrence said. “We don’t know what’s going to happen.”

    As a result, some young adults spend less while others splurge. About half of those surveyed, including a larger portion of Gen Zers, said they prioritize experiences like vacations and events over long-term goals like retirement and savings.

    “You don’t know if you’re guaranteed time,” Lawrence said.

    Women in both parties, she said, are especially concerned about further restrictions on abortion and reduced access to health care if Trump wins and tries to repeal the Affordable Care Act.

    Two of her clients, Lawrence said, asked her to develop a financial plan that included moving to another country.

    However, it is not only Democrats who are concerned about the dramatic change in life in the US

    “Both parties are sending messages that the sky will fall if the other candidate is elected,” Merriman said.

    “You’re not going to have a country” if Harris is elected, Trump has repeatedly said at rallies, in an apparent reference to what he describes as Harris’ more liberal immigration policies. Meanwhile, Harris recently told supporters in Washington, DC, the election “is a choice of whether we have a country rooted in freedom for every American or ruled by chaos and division.”

    Both sides’ rhetoric has been amplified by the near-constant buzz of social media and news commentary that often exaggerates the dangers of the other side winning, Merriman said. This could cause people to change their behaviour, including spending.

    Generation Zers, she said, have already seen their high school and college years diminished by the COVID-19 pandemic.

    The election “is more of an unknown,” Merriman said.

    While young people are spending more conservatively, they are not alone. Fifty-three percent of Republicans, 39 percent of Democrats and 53 percent of independents said they are spending less because of the uncertainty leading up to the election, according to an Ipsos poll conducted in early October of 1,085 adults 18 and older .

    Nancy Torborg, who is in her 60s and lives in North Carolina, previously told USA Today that she believes “people will have more confidence in the economy if Trump wins.”

    Meanwhile, Sherida Sutherland, 75, of Rochester, New York, said Trump’s 2017 tax overhaul increased her tax bill by $6,000, and she fears his re-election could squeeze even more much the finances. She said she has stopped buying the occasional outfit for her granddaughters and is putting off replacing her 2008 Nissan truck with 138,000 miles on it. He is also considering moving to Portugal after the election.

    “I’m cautious,” she said. “Very cautious.”

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