CONSUMER habits have been fluctuating recently in response to economic uncertainty, leading to some interesting spending trends.
Money-saving moves and budgeting plans are all over social media, but some shoppers are taking the opposite approach.
Americans are spending thousands on one-time experiences (stock image)[/caption]
Through what’s known as “treatonomics,” many Americans are starting to pay more for luxury experiences to enjoy the present time as much as possible, rather than saving for future needs, per CNBC.
Treatonomics is growing in popularity as a way to boost overall morale despite cost concerns.
Products like makeup, perfume, candles, and other pricey daily personal care items can be top buys for those who indulge.
Even trinkets like collectible rubber ducks placed on the dashboard of Jeep Wranglers and viral Labubu dolls are having spikes in sales.
Labubu dolls are plush toys designed by Hong Kong-based artist Kasing Lung.
They were originally introduced in 2015 as part of The Monsters series of offerings, but later got on American consumers’ radar after Chinese toy company Pop Mart started producing and selling them in blind boxes back in 2019, per NPR.
The Labubu desire continues this year, with some variations like the Summer Ride Figure, selling for as much as $43.99 through Pop Mart.
Except, treatonomics is a bit different for a very similar other trend that’s been around for decades and known as the “lipstick effect.”
LARGER PURCHASES
Like treatonomics, the lipstick effect was a theory that, in response to a recession or an economic decline, sales of lipstick would increase, sort of as a way to cope with the uncertainty.
It was first coined during the Great Depression in the 1930s, and was reinvigorated in the early 2000s by Leonard Lauder, former chairmen of makeup company Estée Lauder.
Lauder noticed a spike in sales of lipstick directly after the terrorist attacks in New York City on September 11, 2001.
“The lipstick effect means basically, buying yourself small treats when you’re under financial pressure,” John Stevenson, retail analyst at UK-based investment bank, Peel Hunt, told CNBC.
“You can’t afford a new dress or outfit, but you can always get new lipstick. You can’t afford to get a new sofa, but you can get a throw or some cushions. You can’t redecorate the house, but you can get a new tablecloth.”
The slight difference in treatonomics this time around is that consumers in 2025 are willing to make one-time splurges, sometimes worth thousands, while religiously cutting back on living expenses.
What items will be affected by the tariffs?
AMERICANS should prepare to see significant prices changes on everything from avocados to cars under President Donald Trump’s new global tariffs.
Here is a list of some of the everyday products that could see a massive price tag surge.
- Coffee
- Tea
- Bananas
- Foreign-made cars
- Sneakers
- Furniture and other home goods
- Pharmaceuticals
- Video games
- Clothing
- Toys
- Washers and dryers
- Avocados
- Housing materials
“Treatonomics is almost another step further, where you are cutting back on everyday living costs, you’re cutting back on basics, maybe you’re buying more own brands in the supermarket, but by the same token, you’ll go and do an Oasis concert for the weekend,” Stevenson explained.
Experiences like that could be upwards of $1,330 or more.
BRING ON THE DEBT
Meredith Smith, senior director at retail analyst firm Kantar, emphasized that treatonomics is about “injecting moments of guilt-free joy into life,” and that it was “the ‘lipstick effect’ on steroids.”
“Consumers have this heightened sense of uncertainty coupled with more options and access than ever before to turn life’s everyday decisions into an opportunity for a treat,” Smith explained.
“As a result, people are romanticizing their water intake, how they dress and decorate their homes, buying themselves treats a ‘mental health’ boost and more – all to inject joy into fraught times.”
Smith also said more traditional life milestones, like marriage and home ownership, are becoming “out of desire because they’re no longer attainable” with Gen Z, so they place spending elsewhere.
In a similar vein, many Americans have been willing to go into debt to take a vacation, with one in three (29%) saying they’d do so this summer, according to a survey from Bankrate.
A study from WalletHub also found that 22% of Americans said it was worth going into debt to take the trip.
COST OUTLOOK
These reactions to the current economic landscape also come as economists expect prices to go up considerably later this year as a result of President Donald Trump’s tariff policies, per Fox Business.
Some experts from Goldman Sachs said they “expect tariffs to continue to boost monthly inflation and forecast monthly core Consumer Rrice Index (CPI) inflation between 0.3-0.4%.”
This was further echoed by Gregory Daco, chief economist at EY-Parthenon, in a recent newsletter.
“While inflation impacts from the duties are still emerging, they’re increasingly visible,” Daco wrote.
“In June, tariffs accounted for roughly a quarter to a third of the CPI increase.”
“Since import prices are not materially declining, this suggests foreign exporters are passing costs through rather than absorbing them,” the economist continued.
“US businesses, meanwhile, are reporting severe impacts on their earnings, reduced investment plans and slower hiring.”
Back-to-school essentials are also about 20% more expensive, but there’s a workaround for some parents.
Gen Z graduates are also scrambling as AI threatens to take over some white collar jobs in the coming years.
