“Permacrisis” Named Word of the Year by Collins Dictionary
A prolonged period of instability and insecurity resulting from a series of catastrophic events. That is the definition of ”permacrisis,” the word selected by Collins Dictionary as the Word of the Year in 2022. And it perfectly describes a whole generation that has experienced the 2008 economic crisis, the pandemic, and now an unprecedented inflation shock.
These young people have seen their life aspirations frustrated and have ended up giving up on buying a house or starting a family. However, they spend more than they earn and, despite the inflationary context, they do not skimp on the consumption of non-essential goods and services. In fact, in the last year, their spending on bars, restaurants, trips, or clothing has almost doubled the rate of the Consumer Price Index (CPI).
This is the main conclusion reached by José Luis Nueno, a professor at IESE, in his book “Everything is Terrible, But I’m Fine,” published by the manufacturers and distributors”Permacrisis” Named Word of the Year by Collins Dictionary
A prolonged period of instability and insecurity resulting from a series of catastrophic events. That is the definition of “permacrisis,” the word selected by Collins Dictionary as the Word of the Year in 2022. And it perfectly describes a whole generation that has experienced the 2008 economic crisis, the pandemic, and now an unprecedented inflation shock.
These young people have seen their life aspirations frustrated and have ended up giving up on buying a house or starting a family. However, they spend more than they earn and, despite the inflationary context, they do not skimp on the consumption of non-essential goods and services. In fact, in the last year, their spending on bars, restaurants, trips, or clothing has almost doubled the rate of the Consumer Price Index (CPI).
This is the main conclusion reached by IESE professor José Luis Nueno in his book “Everything is Terrible, But I’m Fine,” published by the manufacturers and distributors association AECOC. “Older citizens are more cautious in their investments, while young people, who are part of this ‘permacrisis’ consumer group, continue to spend on items such as cheap clothing, bars and restaurants, entertainment, or low-cost travel,” he explains.
In terms of data, between the first quarter of 2022 and the first quarter of 2023, inflation rose by 5.5%, while the spending of this generation on clothing, going out for a drink or dinner, and even traveling grew much more. If we break down the consumption categories, we can see remarkably high increases in spending on clothing and footwear (10.2%), restaurants (10%), travel and hotels (9%), or flights and car rentals (28.7%).
It is paradoxical because these are precisely the “frivolous” expenses that consumers claim they will cut back on. The author relies on several surveys conducted in Germany, France, Italy, the United Kingdom, and Spain and draws some interesting conclusions: 62% of the population believes that the economic situation in their country will worsen, while only 40% believe that their own situation will. In addition, 48% say they will cut back on spending in bars and restaurants, 40% say they will save on clothing, and 38% say they will save on leisure activities. But the reality is that spending is soaring in all of these areas.
Nueno understands that one explanation for this behavior of younger consumers “could be their pessimism about the limited possibilities of becoming independent, creating their own home, or starting families. Without long-term projects that may require savings, they allocate their budget to more affordable expenses.” According to the professor’s analysis, this consumer profile “has not yet felt the weight of recurring financial burdens, such as insurance or mortgages, so they allocate part of their income to affordable pleasures, which are the ones they can afford.”
This phenomenon affects the polarization of consumption, which implies growth in both cheaper and luxury categories. This is confirmed by the most recent reports from AECOC Shopperview, which confirm that although the economic situation of half of Spanish households has worsened, consumers are not giving up on certain items. Specifically, 35% spend the same or more than last year on leisure, shows, culture, and travel. 16% are buying more premium or gourmet products, and 61% are still going out to bars and restaurants the same or more than in 2022.
Household Budget
When looking at the distribution of the budget in households, it is clear that non-discretionary spending (such as mortgages or utilities, regardless of food) accounts for 33% of total spending. With grocery shopping,”Permacrisis”: The Word of the Year Reflects a Generation’s Struggle
A prolonged period of instability and insecurity, particularly resulting from a series of catastrophic events. That is the definition of “permacrisis,” the term selected by the Collins dictionary as the Word of the Year in 2022. And it perfectly describes a whole generation that has experienced the 2008 economic crisis, the pandemic, and now an unprecedented inflation shock.
These young people have seen their life aspirations frustrated and have ended up giving up on buying a house or starting a family. However, they spend more than they earn and, despite the inflationary context, they do not skimp on the consumption of non-essential goods and services. In fact, in the last year, their spending on bars, restaurants, trips, or clothing has almost doubled the rate of the Consumer Price Index (CPI).
This is the main conclusion reached by José Luis Nueno, a professor at IESE, in his book “Everything is Terrible, But I’m Fine,” published by the manufacturers and distributors association AECOC. “Older citizens are more cautious in their investments, while young people, who are part of this ’permacrisis’ consumer group, continue to spend on items such as cheap clothing, bars and restaurants, entertainment, or low-cost travel,” he explains.
In terms of data, between the first quarter of 2022 and the first quarter of 2023, inflation rose by 5.5%, while the spending of this generation on clothing, going out for drinks or dinner, and even traveling grew much more. If we break down the consumption categories, we can see remarkably high increases in spending on clothing and footwear (10.2%), restaurants (10%), travel and hotels (9%), and flights and car rentals (28.7%).
It is paradoxical because these are precisely the “frivolous” expenses that consumers claim they will cut back on. The author relies on several surveys conducted in Germany, France, Italy, the United Kingdom, and Spain and draws some interesting conclusions: 62% of the population believes that the economic situation in their country will worsen, while only 40% believe that their own situation will. In addition, 48% say they will cut back on spending in bars and restaurants, 40% say they will save on clothing, and 38% say they will save on leisure activities. But the reality is that spending is soaring in all of these areas.
Nueno understands that one explanation for this behavior of younger consumers “could be their pessimism about the limited possibilities of becoming independent, creating their own home, or starting families. Without long-term projects that may require savings, they allocate their budget to more affordable expenses.” According to the professor’s analysis, this consumer profile “has not yet felt the weight of recurring financial burdens, such as insurance or mortgages, so they allocate part of their income to affordable pleasures, which are the ones they can afford.”
This phenomenon affects the polarization of consumption, which implies growth in both cheaper and luxury categories. This is confirmed by the most recent reports from AECOC Shopperview, which confirm that although the economic situation of half of Spanish households has worsened, consumers do not give up on certain items. Specifically, 35% spend the same or more than last year on leisure, shows, culture, and travel. 16% are buying more premium or gourmet products, and 61% continue to go out to bars and restaurants the same or more than in 2022.
Household Budget
When looking at the distribution of the budget in households, it is clear that non-discretionary spending (such as mortgages or utilities, excluding food) accounts for 33% of total spending. With grocery shopping, it rises to 49%. Durable discretionary expenses, such as furniture, electronics, or vehicles, make up 15.6% of the budget and are the main source of cuts in times of recession, generating over 40% of savings.
In the case of services, they account for 27% of spending and 35% of savings when necessary. Meanwhile, non-durable expenses account for 22% of spending and 18.6% of savings. And it is in these savings that reducing consumption in bars and restaurants, as well as in clothing, buying items on promotion, or looking for cheaper stores, is included.
The study uses a consumer with an average salary of €19,817 per year as a reference. It estimates that their spending amounts to €22,598 per year. Therefore, the difference between income and expenses is paid with savings, credit (mainly cards), or with the help of the family support network.
And all of this is happening in a context where salaries have increased by
What is the significance of “permacrisis” being chosen as the Word of the Year by Collins Dictionary in 2022?
Permacrisis: The Word of the Year According to Collins Dictionary
Collins Dictionary has chosen “permacrisis” as the Word of the Year in 2022. This term refers to a prolonged period of instability and insecurity caused by a series of catastrophic events. It resonates with a generation that has faced the 2008 economic crisis, the pandemic, and the current unprecedented inflation shock.
For many young people, their life aspirations have been dashed, leading them to abandon dreams of buying a house or starting a family. Despite this, they continue to overspend, ignoring the inflationary context, and indulging in non-essential goods and services. In fact, their expenditure on bars, restaurants, trips, and clothing has increased at a rate almost double that of the Consumer Price Index (CPI) in the past year.
This revelation comes from the book “Everything is Terrible, But I’m Fine” by José Luis Nueno, a professor at IESE. The book, published by the manufacturers and distributors association AECOC, examines the spending habits of different generations. Nueno explains, “Older citizens are more cautious in their investments, while young people, who are part of this ‘permacrisis’ consumer group, continue to spend on items such as cheap clothing, bars, restaurants, entertainment, or low-cost travel.”
Data shows that between the first quarter of 2022 and the first quarter of 2023, inflation rose by 5.5%. Meanwhile, the spending of this generation on clothing, dining out, and travel increased even more. Specifically, there were significant rises in spending on clothing and footwear (10.2%), restaurants (10%), travel and hotels (9%), as well as flights and car rentals (28.7%).
This trend is paradoxical as these are precisely the “frivolous” expenses that consumers claim they will cut back on. Nueno refers to surveys conducted in Germany, France, Italy, the United Kingdom, and Spain, which reveal interesting findings. While 62% of the population believes that the economic situation in their country will worsen, only 40% believe that their own situation will deteriorate. Additionally, 48% claim they will reduce spending in bars and restaurants, 40% plan to save on clothing, and 38% aim to cut recreational expenses. However, the reality contradicts these intentions, with spending in these areas skyrocketing.
Nueno offers an explanation for the behavior of younger consumers, stating, “Their pessimism about limited possibilities for independence, homeownership, or starting families could be a contributing factor.” These challenges have led them to prioritize immediate gratification through spending rather than saving for the future.
