Well people do both. And different people do different things. I also think a big factor is the amount of inflation. Like the fed targets a 2-3% inflation because that encourages people to spend for exactly the reason you're talking about. Basic monetary theory. But inflation based recessions are a different story and people prepare for the shock. People will hold money because they also expect inflation to reduce and this be a temporary issue. If you expect prices to fall back down, then you should save instead of spending now.