Psychology, Not Economics, Explains Why Americans Keep Spending Despite Low Consumer Confidence
Source: "Consumer confidence drops but consumer spending keeps on climbing | Fox News." October 16, 2026. www.foxnews.com
The Gist
People say they're worried about money, but they keep spending more. The author, a financial advisor, argues this is mostly about psychology: we compare ourselves to others online, we finance everything, wealthier people are propping up spending, we shop to feel better, and we mistake looking rich for being rich. His fix is to build simple habits like waiting before buying and saving automatically.
Conclusion
The gap between Americans' low economic confidence and their rising consumer spending is best explained by human psychology and behavioral habits (social comparison, easy financing, uneven spending power, spending as an emotional response, and confusing appearance with wealth), so individuals should adopt disciplined budgeting habits.
Premises
- Consumer confidence fell to 81.9 in September while per-household credit and debit card spending rose 6.2% year over year, so sentiment and spending are diverging.
- Social media has intensified social comparison, pushing people to match others' curated highlight reels and spend beyond their means.
- Buy-now-pay-later and other financing make expensive purchases seem affordable by splitting them into small payments, so people lose track of future obligations.
- Spending is not uniform across households: higher-income Americans with investment portfolios benefit from rising asset prices and can afford to spend, while others stretch their paychecks, and some spending growth reflects higher prices for necessities.
- Anxiety about the future can trigger spending as emotional relief (retail therapy, 'enjoy today') rather than greater saving.
- Americans increasingly confuse displaying wealth with accumulating it, even though income and spending are not net worth.
Assumptions
- The aggregate spending increase reflects discretionary and lifestyle spending rather than mainly inflation or necessities.
- The author's anecdotal observations as a financial advisor generalize to the broader population.
- Consumer confidence surveys accurately reflect real financial anxiety, so the gap is a genuine puzzle.
- Psychological factors are a more powerful explanation than macroeconomic factors like inflation, interest rates, or wealth distribution.
- Individual behavioral changes (waiting periods, avoiding BNPL, automatic savings) would meaningfully improve people's finances.
- Social media and financing practices are more influential now than in the past.