Are we spending more because we can, or because we have to?

Summary of Are we spending more because we can, or because we have to?

by Marketplace

25m•November 12, 2025
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Overview of Are we spending more because we can, or because we have to? (Marketplace)

This Marketplace episode (host Kai Rizdell) examines contemporary consumer behavior and the forces pushing Americans to spend more — both voluntary (ability) and involuntary (necessity). Through reporting and interviews, the show covers: recent card-spending data, holiday spending outlook, seasonal housing activity, shifts in Europe’s economic landscape, elevated market valuations tied to AI, rising subprime car-loan delinquencies, and the growing market for screen-time reduction tools. The episode mixes data, expert commentary, practical tips, and brief market updates.

Key segments and summaries

1) Consumer spending: paying more vs buying more

  • Bank of America Institute data: consumer card spending rose in October (month-to-month and year-over-year); year-over-year growth the fastest since early 2024.
  • Important distinction: the volume of goods bought hasn’t risen much since January — consumers are largely paying more for the same things (price effects like tariffs and inflation).
  • Holiday spending outlook: surveys show consumers plan to cut back (Conference Board: average planned spend ~$990, down ~6.9% YoY), but forecasters expect overall holiday spending to rise ~3.7–4.2% (driven by people who can spend).
  • Income split: higher-income households continue to support spending (wage growth, household wealth, low unemployment), while lower-income households struggle more.
  • Practical tip from LendingTree: make a list before shopping to reduce impulse buys.

2) Housing seasonality and holiday home buying

  • Mortgage Bankers Association: mortgage applications up ~31% vs. same week last year — more activity than usual for November/December.
  • Buyers can find more negotiating leverage during slower season; sellers may be motivated to close before holidays.
  • Some buyers are acting to lock in ~6% 30-year rates as mortgage rates have fallen recently; past rate drops showed lagged boosts to sales (e.g., rate drop in Sept 2024 led to Nov/Dec pickup).

3) Europe’s role reversal

  • Discussion with Chelsea Delaney (WSJ): countries hit hardest in the 2010s (Spain, Greece, Portugal, Italy) have largely recovered and in some cases outperformed, aided by post-bailout reforms and a tourism boom.
  • Now, fiscally strained countries include France, the UK, and Germany (budget issues, weak reforms).
  • Parallel to the U.S.: the U.S. runs larger deficits and benefits from dollar demand, but that doesn’t eliminate long-term fiscal concerns.

4) Markets and P/E ratios

  • S&P 500 average P/E around 25. Large portion of market gains tied to heavy investments into AI.
  • Analysts point out historical periods of high P/E (pre-Great Depression, late-1990s internet bubble) as cautionary precedents — "this time could be different" but uncertainty remains.

5) Subprime auto loans: rising delinquencies

  • Fitch: 6.6% of subprime auto borrowers were 60+ days late — a record for the dataset.
  • Causes: record-high vehicle prices (~$50k average for new cars), larger loan sizes, higher interest rates.
  • Differences vs. subprime mortgages: auto loans are much smaller in aggregate than mortgages and less likely to pose immediate systemic risk; banks are not widely writing off these loans yet, and widespread bankruptcies are not currently evident.

6) Screen-time reduction industry

  • Growing market of apps and hardware that help people curb phone use (examples: ClearSpace, Brick, Bloom, Block, Matter Neuroscience).
  • These tools use gamification and tracking — ironically the same mechanics social platforms use — and can cost from ~$30 to $209 (plus subscriptions).
  • Effectiveness varies; many tools can be cheated and the root issue is structural design of platforms, not just individual willpower.

Notable quotes

  • "We are just paying more for it." — summary of why spending rises without higher volumes.
  • "Nobody knows." — on whether high P/E ratios (driven by AI expectations) are justified.
  • "I think being chronically online...is not like a personal fault. It's something we are using these technologies the way that they're designed to." — on the limits of individual solutions to screen addiction.

Important data points (quick reference)

  • October consumer spending: up ~2.5% month-to-month; fastest YoY growth since early 2024.
  • Conference Board planned holiday spend: ~$990 (down 6.9% YoY).
  • Holiday spending forecast: +3.7% to +4.2% YoY (forecasters).
  • Mortgage applications: up 31% vs. same week last year (Mortgage Bankers Association).
  • S&P 500 average P/E: ~25.
  • Subprime auto 60+ day delinquency: 6.6% (Fitch) — highest on record for this dataset.
  • Average new car price: roughly $50,000.

Main takeaways

  • Much of current higher consumer spending reflects higher prices, not substantially greater quantities bought.
  • Holiday spending may rise overall, but with notable downward pressure in planned household budgets — outcomes will be uneven across income groups.
  • Late-year housing can offer bargaining power for buyers; recent mortgage-rate drops are prompting action but timing and future Fed moves remain uncertain.
  • Europe’s economic landscape has shifted since the 2010s; policy choices (or lack of pressure to reform) matter.
  • High market valuations hinge on optimistic AI-driven growth expectations — risk and uncertainty remain.
  • Auto-loan delinquencies among subprime borrowers are at record levels for recent decades; elevated car prices and loan sizes are a key driver, but systemic contagion risk is lower than 2008’s mortgage crisis.
  • Market for screen-time reduction is growing, but many solutions replicate the same gamification that encourages phone use, and they can be expensive with mixed effectiveness.

Actionable advice

  • Holiday shoppers: set a firm list and budget before buying; expect sticker shock compared to last year.
  • Potential homebuyers: consider off-season negotiation leverage and monitor mortgage-rate trends — lower rates may spark faster competition.
  • Auto buyers: beware rising loan amounts and interest costs; compare financing options, consider used or smaller vehicles if budget-constrained.
  • For screen-time concerns: try simple, low-cost strategies first (app timers, notifications off, environment changes) before paying for hardware or subscriptions; be aware gamified tools may trade one set of behavioral triggers for another.

Closing notes and miscellaneous

  • The episode includes several sponsor/read promos (Kachava, Salt Lake Family Christmas Gift Show) and a reminder that BLS/Census reference-week timing affects the November jobs-data release schedule.