The Ups and Downs: Taking Risk When the Economy Fluctuates

The U.S. economy has always experienced some major highs and lows, and currently, is in a decent place. When the market is in the middle, meaning it could be better but it could also worse, it’s often referred to as the “Goldilocks Economy.”

Certain aspects of the economy are healthy like the stock markets and interest rates. Even if some Americans don’t follow the markets closely (or even understand how it works all the time), some take risks when the economy is bad while others take more risks when it’s good.

A Generation of New Spenders

It’s also important to note that one of the largest demographic groups, the Millennials or the “Children of the Recession,” have different spending habits than the previous generations. It’s not that Millennials aren’t spending money, they just spend what they earn differently.

Rather than taking financial risks on material things like cars and homes or even stocks, the demographic of about 75 million are more likely to spend money on experiences. Whether it’s a new Pad Thai restaurant, visiting OnlineCasinoBluebook.com to play online poker, or a trip to South America, some Millennials want to spend money on things they can enjoy instantaneously, not long term purchases.

Whether the economy is good or bad, money is spent on “experiences,” it may just take a bit longer to save up.

Spending in a Good Economy

Traditionally, when the market is healthy, many Americans are willing to take financial risks on buying a home, upgrading vehicles, and even household appliances. Some may even consider working for themselves, going back to school, or investing in a startup business. During this time most people see these as investments rather than financial risks.

Just because things are good, doesn’t mean that everyone is willing to spend money. A lot of financial risk taking is based upon one’s economic status and personal attitudes about the economy. Spending preferences can also depend on how one was raised and financial history.

A young adult, for example, could have been raised in a low-income household that scrimped and saved everything. This man or woman will either grow up wanting to take financial risks or none at all.

According to a Gallup poll from May, 35 percent of “financially stressed” Americans like to keep spending more money, while 63 percent are saving more.

Spending in a Bad Economy

When we see dips and lulls in the economy, it’s not uncommon to see a pause on consumer spending. Again, it depends on personal finances and spending habits. As mentioned early, many people save more than they spend when they feel less than confident about the economy.

During bleak times, as well as personal financial struggles, it’s not uncommon for people to look into “get rich quick” schemes or even buy more lottery scratch off or Powerball tickets. Some Americans are likely to keep spending during a bad economy in hopes of boosting it or doing their part, but it all comes down to whether one has the money or not.