Are people ‘panic buying'? Economist explains which big purchases you may want to make now
(NEXSTAR) – As the White House announced a slate of tariffs, Americans headed straight to car lots. Reddit threads encouraged expecting parents to act now and secure a car seat and stroller before it's too late. Others questioned whether they should buy Christmas presents now, far ahead of the holiday season.
As tariffs have been announced and then scaled back, many consumers are left unsure of what to do and tempted to make big purchases or stock their pantries now in case prices suddenly skyrocket.
'There's panic buying going on and panic selling by investors, too,' Gene Munster, managing partner at Deepwater Asset Management, told the New York Times. 'It's more turmoil than I've seen in 20 years following the company. The speed of it has been crazy.'
Panic buying is an emotional response to disaster or uncertainty, explained Tyler Schipper, associate professor of economics at the University of St. Thomas. It's often driven by a fear that there will be big price increases or shortages.
'The last time people probably saw a lot of panic buying would have been during the pandemic when there wasn't enough hand sanitizer on the shelves. So when you saw it, then you bought four or five big things of sanitizer, and that led to a shortage of goods for the next person,' he said.
There may be a decent amount of panic buying going on, Schipper admitted, but finding data on it is hard. It's not easy to tell how many people are stocking up on stuff they don't need (which would be panic buying) or if people are just moving up purchases they would otherwise be making.
Automobile sales, for example, have accelerated since the Trump administration's tariff announcements.
'People have pretty clearly moved up buying cars because they're afraid about cars being more expensive in the future,' Schipper said. 'But in a lot of ways, I put that in a different category from panic buying. I think that's people being forward-looking and not wanting to face higher prices, versus going and buying 10 things of hairspray because you're worried about it being more expensive. I think that's in a different category.'
If you know you're going to need a new car or stroller or laundry machine soon, Schipper said it may make sense to buy it now. 'You know you're going to have need of a stroller, so you might move that purchase up because it's likely going to be more expensive once current inventory runs out.'
Fulfilling a known need is different than buying lots of new undershirts, toys or electronics in case you may need them later. Consumers should strongly consider their overall finances before stocking up, Schipper warned. Racking up credit card debt means you'll be paying more in interest for your panic buying, and you won't end up saving any money after all.
As some people go on spending sprees, others are pulling back on spending, nervous about the economy. Those two factors counteracted each other somewhat, the Commerce Department said this month. Retail and restaurant sales rose just 0.1% between March and April.
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