WSJ Your Money Briefing - How ‘Election Fatigue’ Can Lead Us to Overspend

Episode Date: September 23, 2024

Financial advisers say the tone and frenetic pace of political campaigns can add to someone’s financial anxiety, causing some people to find comfort by overspending. Wall Street Journal contributor Julia Carpenter joins host J.R. Whalen to discuss how you can rise above the political fray and better manage your personal finances . Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street. Here's your money briefing for Monday, September 23rd. I'm JR Whalen for the Wall Street Journal. There are lots of reasons why people overspend. Impulse of shopping, the feeling of, but it was on sale, or I just had to have it. But as we get closer to November, something else has crept onto the list. Election fatigue. It is affecting people who are struggling to

see the smaller picture within the bigger picture. A lot of people have unfavorable views of both political parties and there's this feeling that there's no point in saving, no point in investing, no point in developing these healthy financial habits because you have this pessimistic view. We'll talk to Wall Street Journal contributor Julia Carpenter after the break. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast.

Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI. OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street, oracle.com slash wall street. We will never give in, we will never give up, and we will never stop fighting. This campaign is about who we fight for. I'm Donald J. Trump and I approve this message. I'm Kamala Harris and I approve this message. The daily drumbeat of election news and high volume political ads has caused some people

to find comfort in overspending. Wall Street Journal contributor Julia Carpenter joins me. Julia, how long has this relationship between election fatigue and overspending been going on? It's something economists have long debated. Every election cycle, people get very worried that consumer spending will be decreasing, and then other people are worried it will be increasing.

And so every year we're sort of reassessing whether or not this is true and what it means for what's happening in the economy right now. But I am formally polled, my friends, other young people, peers, and it seems that when everyone is fatigued by the headlines, the nonstop news, they just decide to bury their heads in the sand and seek comfort in purchases. So what's the connection? Why does politics influence people's spending habits?

So we know that there is this effect called the what the hell effect. It's when you feel very overwhelmed by things. You throw your budget out the window, literally throw your hands up in the air and say what the hell. We see it when people feel overwhelmed by life or work or anything else besieging them. And that's where we see this temptation of treating yourself creeping in. So who's this affecting the most? When I was speaking with advisors, they said that it is affecting people who are struggling to see the smaller picture within the bigger picture. We

already know that young Americans take this particularly grim view of U.S. politics. A lot of data from Pew Research Center shows that a lot of people have unfavorable views of both political parties and that they are feeling pessimistic about the direction of the country and there's this phenomenon that researchers have called financial nihilism. That's that feeling that there's no point in saving, no point investing, no point in developing these healthy financial habits because you have this pessimistic view. But is it fair to blame overspending entirely on politics?

Are there other forces at work? Totally not fair to blame entirely on politics. I wrote in the piece about how a friend and I recently got together and what was supposed to be kind of a low key getaway became bougier and bougier and bougier. I cannot blame that on politics. I can blame it on a couple other things. But I think it is this feeling of overwhelm that an election cycle contributes to.

OK, so that's an event you planned with your friend. What's been your experience during this entire election season? I'm one of those people who, in an election year, I spend way too much time on my phone. Every new news alert, every new tweet, every new update, that becomes my obsession for the day. And so I'm like those people who feel that overwhelm.

I focus too much on what could happen and not enough on what I can do and what I've prepared for. If people are unsettled by political discourse, why wouldn't that cause them to save and hedge against trouble ahead rather than overspend? It depends on what kind of financial person you are. If you are someone who knows that it helps you to prepare, it helps you to focus on your financial plan, it helps you to focus on your sphere of control, then you'll do that. If you're someone who thinks, well, it helps me to go to the beach

with my friend and get massages, that was me, then that's what you're going to do. And it's all about retraining your brain to become less of one thing and more of another. So when I was speaking with advisors for this piece, their advice to me was focus on your sphere of control. Think about what is in your wheelhouse, what you can direct. That was a huge comfort to me. How else do financial experts suggest that people rise above the political noise

that's unsettling them and better manage their finances? Advisors told me that when things feel big, you can focus on the small, and that was hugely helpful to me. So when I'm reading headlines, worrying about what the next few years could bring, trying to predict market cycles in my head, interest rates in my head. Instead of doing all of that big stuff, I can focus on the small stuff. I can think,

okay, I will up my personal savings rate. I will contribute a little more to this area. I will allocate maybe a little more in that fun budget area so that I don't feel as constrained. Little things that can help me deal with those bigger feelings. That's WSJ contributor Julia Carpenter, and that's it for your Money Briefing. We'll be back tomorrow with WSJ's Ray Smith to discuss how it's still possible to score a signing bonus when you're hired. Just be sure to ask for it. This episode was produced by Zoe Culkin with development producer Aisha Al-Muslim and deputy

editor Chris Zinsley. I'm JR Whalen for The Wall Street Journal. Thanks for listening.