Consumer Confidence Is Falling, But Spending Keeps Rising — Here’s Why

Consumer confidence in the United States has dropped sharply even as household spending keeps climbing, a gap that financial advisor Ted Jenkin explores in a new opinion piece for Fox News.

The Conference Board’s Consumer Confidence Index fell to 81.9 in September. At the same time, consumer credit and debit card spending per household rose 6.2% from a year earlier, according to the figures Jenkin cites.

Jenkin, a financial advisor, argues the disconnect isn’t primarily driven by inflation or interest rates but by psychology. He lays out five factors he believes explain why Americans keep spending even as they describe themselves as financially stressed.

Comparing lifestyles online

Jenkin points to social media as a major driver, arguing that people now measure their lives against curated images from thousands of strangers online rather than against a single neighbor’s new car, as might have happened decades ago. He says this creates a constant sense that someone else is doing better financially, even when that isn’t necessarily true.

Easy financing

Jenkin also points to the spread of buy-now-pay-later financing, noting that large purchases can now be broken into small installments that make them feel more affordable than they are. He says the real risk isn’t the financing itself but losing track of how many payment obligations have piled up.

Not everyone is struggling equally

According to Jenkin, higher-income Americans with substantial investment portfolios have benefited from rising asset prices and can comfortably afford vacations and new vehicles, while other households are stretching paychecks to keep up appearances, with some spending increases simply reflecting higher prices on necessities.

Spending as stress relief

Jenkin suggests that economic anxiety doesn’t always push people to save more — for some, it has the opposite effect, prompting spending as a form of stress relief, such as online shopping, dining out or booking a trip.

Jenkin’s suggested fixes

Jenkin, who says he has spent decades advising families on their finances, recommends three changes for people trying to rein in spending:

• Put any nonessential purchase over $100 on a 48-hour waiting period before buying.
• Avoid buy-now-pay-later financing for 30 days, on the premise that if you can’t pay cash for something discretionary, you likely shouldn’t buy it.
• Automatically move a percentage of each paycheck — he suggests starting at 5% or lower if needed — into savings before spending anything else.

Jenkin’s larger point is that income and visible spending are not the same thing as wealth. He notes he has encountered millionaires who drive older cars and high earners making $250,000 a year who could not cover a $10,000 emergency expense.