Pandemic vices are putting more consumers in debt: 'It's 100% instant gratification'

Coronavirus leads consumers to spend on tangible items, not experiences: Retail analyst

The NPD Group chief retail analyst Marshal Cohen on how retailers are being impacted by the coronavirus, specifically missing out on the back-to-school shopping season, which used to be the second-biggest retail period of the year for many brands.

Coronavirus-induced stress has accelerated consumer spending on pandemic vices.

Continue Reading Below

Alcohol, cigarettes, adult entertainment and lottery tickets are just some of the items 70% of Americans are splurging on during the pandemic, a new survey from financial services company MagnifyMoney suggests.

Adult spending on pandemic vices like smoking and drinking continues to rise. (iStock)

The survey polled 1,550 Americans between Jan. 8 and Jan. 11, almost a full year since the virus became widespread in the U.S., and found that consumers had spent nearly $950 each on their vices since the start of the pandemic. And 38% of those said they used money from their savings to cover the not-so-cheap thrills, posing potentially pricey long-term financial consequences.

Consumers who struggled the most during the pandemic have been saddled with debt as a result of their spending, including: 33% who were laid off or furloughed; 26% of millennials; and 21% of GenZers. And 17% of all respondents went into debt for a vice within the past year.

'JACKPOT FATIGUE' CUTTING LOTTERY TICKET SALES

Michael Salogub., 29, who lives in Westchester, N.Y., can relate. He admits spending more than $1,000 on his iced coffee habit (despite having a coffee machine at home), adding that he's gone on a few too many Amazon spending sprees for “unnecessary gadgets.”

“It’s 100% instant gratification,” Salogub told Fox Business, admitting he should rein in the habits after buying a home during the pandemic. “You can’t go to the store, so it gets the endorphins pumping once you see the ‘package is 10 blocks away’ [in a tracking email]. It’s nice to get something to look forward to that’s not canceled or rescheduled because of COVID,” he added.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

He's certainly not alone. A number of studies have shown that increased stress can lead to an uptick in impulse consumer spending on tangible items and fleeting experiences. A separate report from CreditKarama.com found that 52% of Americans have impulsively shopped to deal with feelings of stress, anxiety or depression — all of which are on the rise as a result of isolation, job loss, and grief brought on by the pandemic.

What's more, unemployment and furloughs during the pandemic have also led to increased spending with 28% of those surveyed who were either laid off or furloughed admitting to spending more money on adult entertainment specifically, the survey found.

Still, many are grappling with buyer’s remorse as a result. Indeed, 45% of those who spent money on vices in 2020 said they feel guilty about it, according to the MagnifyMoney survey.

Source: Read Full Article