Gen Z Spending More on Coffee and Travel in Sign of ‘Little Treat Economy’
America's younger consumers are turning to small indulgences amid mounting economic anxieties.
Despite economic hardship and financial stress, younger consumers, known as Gen Z, are increasingly spending on small but frequent purchases, indicating a growing trend dubbed the "little treat economy." Gen Z, typically defined as those born between 1997 and 2012, are opting for indulgences such as coffee, pastries, travel, and dining out, even as they remain pessimistic about their financial futures.
Sunyee Yoon, a marketing professor at the University at Buffalo, explains that the drive behind this trend is not new, as consumers have long sought affordable ways to reward themselves during tough economic times.
Similar to the "lipstick effect," where consumers buy small luxuries for emotional uplift during economic downturns, the little treat economy involves young adults indulging in small indulgences despite financial strain. Recent studies from the Bank of America Institute and Datassential reveal that Gen Z is experiencing an increase in discretionary spending on items like beauty products, jewelry, coffee, and travel.
Notably, 77 percent of Gen Z individuals treat themselves weekly to coffee or another form of indulgence, suggesting a preference for immediate gratification.
Bank of America data also indicates that Gen Z is leading the growth in restaurant spending, driven by lower restaurant prices, higher grocery costs, and better after-tax wages. A 2025 Circana study found that 73 percent of U.S. consumers consider small indulgences vital to their quality of life, with 34 percent engaging in such purchases to alleviate stress and 40 percent due to financial limitations.
While some argue that these daily treats are a reaction to limited financial prospects, others contend that they reflect the limited options many young adults face as they struggle with unaffordable housing and an unstable job market. Yoon notes that the trend differs from past economic reactions, being "smaller, more immediate, and more frequent," a reflection of the digital age and heightened stress levels among this generation.
Despite economic anxiety, many Gen Z individuals still aspire to financial stability but are unwilling to delay their lives for uncertain conditions.
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