The Decline of YOLO Culture: Potential Economic Implications

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The YOLO economy is now facing a new contender - the “yo, no” economy.

Not too long ago, many of us were excited to splurge on new TVs, upgraded bathrooms and kitchens, Peloton bikes, and expensive bottles of champagne. However, things have taken a turn. This summer, our bathrooms seem outdated and our bottles of champagne remain unopened.

As the pandemic restrictions eased, Americans found themselves with better jobs, more money to spend, and a strong desire to break free from the confines of their homes, regardless of the cost. This led to what was called the YOLO economy (you only live once) or revenge spending trend, where consumers indulged in experiences and products they had missed out on.

Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute, shared that Covid has made us realize the unpredictability of life. Planning for a distant retirement that could be disrupted by unexpected events like a pandemic has shifted our perspectives. Many now prioritize living in the present moment.

Fast forward five years from the start of the pandemic, the era of excessive spending is winding down. This shift may have negative implications for the economy.

Consumer spending is decreasing, with even high-income individuals shopping at discount retailers such as Walmart. Target is reducing prices to attract hesitant shoppers, while businesses like Starbucks are seeing slower sales growth - a Frappuccino is no longer a must-have expense.

The cause? Inflation remains high, and consumers are depleting their savings from the Covid era. The job market is starting to tighten, leading to concerns among workers about potential job loss.

Americans may have exhausted their post-Covid excitement and are now prepared to dial things back. According to Samana, there is a feeling of wondering how long one can continue living in a post-Covid environment filled with stress. Eventually, individuals need to determine what the new normal will be. Employers are increasingly eager to have their employees return to the office more regularly, which is shifting the mindset of being able to work from anywhere. This shift is leading to a return to a more typical way of living.

People are still willing to spend on Taylor Swift concerts and plane tickets, but they are cutting back in other areas. Memorial Day travel reached record levels, as reported by the TSA. This shift in spending habits indicates a trend towards reducing non-essential purchases and opting for more budget-friendly options.

This change in consumer behavior is significant. Before the Bell has discussed how consumer spending played a crucial role in preventing a recession during the challenging times of high inflation and interest rates post-pandemic.

Spending accounts for about 70% of gross domestic product, which is the main indicator of US economic health. It is considered the most crucial measure of a strong economy.

If spending slows down, it could be concerning and possibly lead to the recession that economists have been cautioning about since 2021. However, many economists at major banks and firms do not foresee this happening soon. And even if it does happen, it may not necessarily affect everyone in the same way.

The unexpected economic data last week caused the Dow to drop more than 1,000 points between Tuesday and Thursday, rattling markets and keeping investors on edge. Additionally, the index fell another 115 points on Monday following a report that showed a slight contraction in the manufacturing industry.

Samana mentioned, "There's no clear sign that the factors affecting consumers' confidence will improve in the near future."

These upcoming two weeks will be crucial for investors, consumers, and those keeping an eye on the general economy. On Friday, the official jobs data for May will be made public, and analysts will closely examine the numbers for any indications on the state of the labor market.

Following that, the Federal Reserve will convene for its policy meeting next week. During this meeting, officials will share their projections on employment, inflation, and interest rates for the upcoming months. While it is unlikely that there will be any changes to interest rates at this meeting, Fed Chair Jerome Powell may offer some insights on when the central bank plans to make its next move.

The New York Stock Exchange experienced an unusual glitch on Monday. The exchange reported that a technical problem had caused trading to stop for certain major stocks, leading to a significant drop in Berkshire Hathaway's stock price by 99.97%. The issue has since been fixed, according to the New York Stock Exchange.

NYSE announced that the affected stocks have resumed trading and confirmed that all systems are functioning properly.

According to a senior executive at a major bank who is in contact with Intercontinental Exchange (ICE), the parent company of NYSE, there is no evidence to suggest that the technical issue was a result of a cyberattack.

An NYSE spokesperson mentioned that trading halts on around 40 symbols listed on NYSE Group exchanges were caused by a "technical issue" with industry-wide price bands.

It was explained by NYSE that these price bands are provided by the Consolidated Tape Association’s (CTA) Security Information Processor (SIP), which is an industry group responsible for publishing real-time trade and quote data.

Earlier in the day, dozens of stocks were temporarily halted from trading as they exceeded the limit up-limit down bands, as reported on NYSE’s website. Among those affected were companies like Chipotle and Berkshire Hathaway, the investment firm led by the renowned Warren Buffett.

During this period, Berkshire Hathaway’s Class A shares were displayed as trading at a significantly low price of $185.10, which would suggest a staggering loss of 99.97%. This was a stark difference from the closing price of $627,400 on the previous Friday.

NYSE has announced that it will cancel all "erroneous" trades for Berkshire made between 9:50 am ET and 9:51 am ET at or below $603,718.30. The exchange mentioned that this decision cannot be appealed and suggested that other trades could also be canceled.

A spokesperson for the Securities and Exchange Commission told CNN that they are keeping an eye on the situation and communicating with market participants.

Joe Saluzzi, who co-founded Themis Trading, expressed his skepticism towards the NYSE's explanation, stating that it does not align with the unusual trades that were observed. "I don't believe that explanation. It just doesn't add up for me," said Saluzzi, a market expert and the author of "Broken Markets."

Read more from CNN’s Matt Egan here.

GameStop shares gain after meme stock influencer reveals $116 million bet

GameStop's shares rose by 21% on Monday, indicating that the excitement over meme stocks is still going strong. The surge happened shortly after a Reddit post by stocks influencer Keith Gill, also known as "Roaring Kitty," disclosed that he had purchased almost $116 million worth of GameStop stock. Earlier in the day, the video game retailer's stock shot up by as much as 75% before settling back down.

Gill's Reddit account remained inactive for over three years until he made his first post when the hype surrounding GameStop (GME) shares was at its peak due to social media.

Meme stocks are stocks that experience extreme fluctuations in value based on their popularity within online trading communities, rather than the actual fundamentals of the companies. The craze began with GameStop in 2021 and spread to other companies like AMC Entertainment (AMC) and Bed, Bath and Beyond, which eventually filed for bankruptcy.

Shares of AMC Entertainment were up 11.1% on Monday.

Read more from CNN’s Anna Cooban here.

Editor's P/S:

The article highlights the transition from the "YOLO economy" to the "yo, no" economy, where consumers are becoming more cautious with their spending amid rising inflation and economic uncertainty. While the post-pandemic desire to indulge in experiences and products has subsided, it's crucial to note that spending still plays a significant role in the economy. The slowdown in consumer spending could have negative implications, potentially leading to a recession. However, many economists believe that a recession is not imminent, and if it does occur, its impact may vary depending on individual circumstances.

The article also discusses the impact of the recent New York Stock Exchange glitch, which caused erroneous trades in certain major stocks. The glitch highlights the potential for technical issues to disrupt markets and underscores the importance of robust systems to ensure market stability. While the issue has been resolved, it serves as a reminder of the need for continued vigilance and measures to mitigate potential risks in the financial system.