More Consumers Are ‘Revenge Spending’ Their Stimulus Checks
As the economy ramps up and new stimulus checks are being doled out, “revenge spending” is on the rise.
Increased spending for luxury purchases on status-brand handbags, belts and footwear has been fueled by the latest round of stimulus payments sent out by the Biden administration.
In a conversation with CNBC, consumer savings expert Andrea Woroch said, “The stimulus check feels like free money … People have the urge to go out and splurge on themselves, almost as a reward for being locked down over the past year.” The term for this consumer behavior is revenge spending.
One reason for it could be the shift to primarily online shopping during the pandemic. According to Green Book, 58% of stimulus check recipients will primarily spend the money online, and 48% said it’s because they got used to shopping online during COVID-19.
A McKinsey & Company study on the change in consumer behaviors during COVID also highlighted the surge in e-commerce. Although this recent surge in high-end goods is a positive sign for the luxury market, the sector was amongst some of the most hard-hit during the early days of the pandemic.
McKinsey reported in April of last year that “more than 40% of global luxury-goods production happens in Italy — and all the Italian factories, including small, family-based faconniers, have been temporarily shut down.”
However, industry insiders and economists have optimistic views for the year ahead. National Retail Federation president and CEO Matthew Shay told NBC News, “We remain optimistic that retail will help facilitate a surge in spending, job growth and capital investment.” The trade group forecasts that sales will increase by as much as 8.2% compared to last year, up to $4.4 trillion of economic activity, NBC News reports.
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