‘Americans are slashing their spending, hoarding cash and shrinking their credit card debt as they fear their jobs could disappear during the coronavirus pandemic.’
That is the lead in a CNN Business story this week about how U.S. consumers have been navigating one of the greatest financial curveballs the world has ever seen.
Makes sense, considering the climate.
Drilling into the numbers shows credit-card debt dropped by its biggest percentage in more than three decades, while savings jumped to levels not seen since the Reagan era.
That is good, right? Not necessarily, at least as far as the headline of the story is concerned.
“Although caution is a logical response to that uncertainty, hunkering down also poses a risk to the recovery in an economy dominated by consumer spending,” reporter Matt Egan explained. “A so-called V-shaped recovery can’t happen if consumers are sitting on the sidelines.”
So, should we be out there spending our way out of this mess? Hundreds of responses poured into Reddit’s “Frugal” board, which counts some 1.3 million members.
As you might guess from the name of the group, the notion didn’t go over very well.
“Yep, that’s what happens in a system that demands endless consumption (and yet also ridicules you for not having enough),” wrote one user under the handle PoisonTongue.
Others on Reddit keyed into the idea that consumers should somehow be shamed for raising cash.
“The dissolved middle class holding on to a couple thousand bucks left to their name is ‘hoarding cash,’” BonelessSkinless said. “The hypocrisy is disgusting.”
TheAllMightiest pointed to the pandemic as the reason for his job loss before taking his shot at the widening gap between wealthy and the not-so wealthy.
“I love how the blame immediately goes to the average American, instead of oh, I dunno, the 1% and these megamillionaires buying back their own stocks right now,” he said. “People are just trying to survive and feed themselves right now, and we’re supposed to care about the big picture?”
Meanwhile, the Dow Jones Industrial Average DJIA, -2.17% came under pressure again Wednesday, dropping more than 500 points after Fed Chairman Jerome Powell offered an uncertain near-term outlook of the economy. “The recovery may take some time to gather momentum and the passage of time can turn liquidity problems into solvency problems,” he said.
The way things are going, the allure of “hoarding cash” won’t be going away soon.
“Everyone’s scared and everyone’s shell shocked,” Kent Engelke of Capitol Securities Management told MarketWatch. “You wonder how many days can this go on and people are on edge.”